<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
WD-40 COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
WD-40 COMPANY
1061 CUDAHY PLACE
SAN DIEGO, CALIFORNIA 92110
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The 1999 Annual Meeting of Shareholders will be held at the Mission Valley
Doubletree Hotel, Grand Ballroom, 901 Camino del Rio South, San Diego,
California 92108, on Tuesday, December 14, 1999, at 2:00 p.m. for the following
purposes:
1. To elect a Board of Directors for the ensuing year and until their
successors are elected and qualified;
2. To change the state of incorporation of the Company from California to
Delaware;
3. To increase the number of authorized shares of common stock of the
Company from 18,000,000 to 36,000,000;
4. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year 2000; and
5. To consider and act upon such other business as may properly come
before the meeting.
Only the shareholders of record at the close of business on October 18,
1999 are entitled to vote at the meeting.
By Order of the Board of Directors
Harlan F. Harmsen
Secretary
San Diego, California
November 9, 1999
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of WD-40 Company for use at its Annual
Meeting of Shareholders to be held on December 14, 1999, and at any
postponements or adjournments thereof. This Proxy Statement and enclosed form
of Proxy are first sent to shareholders on or about November 9, 1999.
At the meeting, the shareholders of WD-40 Company will vote to (i) elect
the Board of Directors for the ensuing year, (ii) change the state of
incorporation of the Company from California to Delaware, (iii) increase the
number of authorized shares of common stock of the Company from 18,000,000 to
36,000,000, and (iv) ratify the selection of PricewaterhouseCoopers LLP as
the Company's independent accountants. Detailed information concerning these
matters is set forth below. Management knows of no other business to come
before the meeting.
The close of business on October 18, 1999 is the record date for
shareholders entitled to notice of and to vote at the Annual Meeting of
Shareholders of WD-40 Company. On October 18, 1999, WD-40 Company had
outstanding 15, , Common Shares. Shareholders of record entitled to
vote at the meeting will have one vote for each share so held on the matters
to be voted upon. A majority of the outstanding shares will constitute a
quorum at the meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum.
If the enclosed form of Proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the instructions specified
thereon. Except as described herein with respect to broker non-votes, if no
specification is made, the shares will be voted by the proxy holder as set forth
on the Proxy. A Proxy may be revoked by attendance at the meeting or by filing a
Proxy bearing a later date with the Secretary of the Company.
The cost of soliciting proxies will be borne by the Company. Solicitations
other than by mail may be made by telephone or in person by employees of the
Company for which the expense will be nominal.
-1-
<PAGE>
PRINCIPAL SECURITY HOLDERS
The following table sets forth information concerning those persons
known to the Company to be the beneficial owners of more than 5% of the common
stock of the Company.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Ownership Percent
Name and Address of Beneficial Owner October 18, 1999 of Class
- ------------------------------------ ---------------- --------
<S> <C> <C>
Mario L. Crivello 995,502(1) %
San Diego, California
</TABLE>
(1) Mr. Crivello has sole voting and investment power over 885,514 shares held
in trust for the benefit of his mother and remainder beneficiaries. He also
has sole voting and investment power over 14,780 shares held as custodian
for children and 95,208 shares held directly.
ITEM NO. 1
----------
NOMINEES FOR ELECTION AS DIRECTORS
AND SECURITY OWNERSHIP OF MANAGEMENT
Unless marked to the contrary, the Proxies received will be voted for the
election of the ten nominees named below to serve as Directors until the next
Annual Meeting of Shareholders and until their successors are elected or
appointed. In the event any nominee is unable or declines to serve as a Director
at the time of the Annual Meeting, his or her Proxy will be voted for a nominee
designated by the present Board of Directors to fill such vacancy.
Each shareholder entitled to vote at the Annual Meeting has the right to
vote his or her shares cumulatively for the election of Directors, provided at
least one shareholder has given notice at the meeting of his or her intention to
vote cumulatively. If cumulative voting is in effect, each shareholder will be
entitled to cast as many votes as there are Directors to be elected multiplied
by the number of shares registered in his or her name on the record date, and to
cast all such votes for one candidate or to distribute such votes among the
nominees in accordance with his or her choice.
If cumulative voting is in effect at the Annual Meeting, unless otherwise
indicated by the shareholder, the persons named in the enclosed form of Proxy
will vote, in their discretion, for one or more of the nominees for whom
authority was not withheld and will cumulate votes in such a manner so as to
assure the election of the maximum number of the nominees of the Board.
To be elected as a Director, a nominee must receive the affirmative vote of
a plurality of votes of Common Shares present or represented at the meeting and
entitled to vote for the election of Directors, whether cumulative voting is in
effect or not. Withheld votes and broker non-votes (which are treated as
"withheld" votes) are not counted as votes in favor of any nominee.
Article III, Section 2 of the Bylaws of the Company, duly adopted by its
shareholders on November 25, 1997, provides that the authorized number of
Directors of the Company shall be not less than nine nor more than twelve until
changed by amendment of the Articles of Incorporation or by a bylaw duly
adopted by the shareholders. The exact number of Directors is to be fixed from
time to time by a bylaw or amendment thereof duly adopted by the shareholders
or by the Board of Directors. The number of Directors was fixed at ten upon
adoption of Article III, Section 2 of the Bylaws by the shareholders on
November 25, 1997.
-2-
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, including beneficial
ownership of the Company's common stock, for the ten nominees, for the
executive officers named in the Summary Compensation Table on Page 17, and
for all Directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
October 18, 1999(1)
Director -----------------------------
Nominee Age Principal Occupation Since Number Percent of Class
- --------- ---- -------------------- -------- --------- ----------------
<S> <C> <C> <C> <C> <C>
John S. Barry 75 Retired; Former Chief 1970 403,145 %
Executive Officer and Present
Chairman, WD-40 Company
Mario L. Crivello 59 Investor 1994 995,502(2)
Daniel W. Derbes 69 President, Signal Ventures 1984 1,250 *
Harlan F. Harmsen 72 Retired Attorney; 1977 6,400(3) *
Secretary, WD-40 Company
Jack L. Heckel 68 Retired; Former President and 1989 4,080 *
Chief Operating Officer,
GenCorp
Garry O. Ridge 43 President and Chief 1997 44,330(4) *
Executive Officer,
WD-40 Company
Margaret L. Roulette 75 Investor 1977 761,145(5)
Gerald C. Schleif 64 Retired, Former President and 1989 50,292 *
Chief Executive Officer,
WD-40 Company
C. Fredrick Sehnert 68 Retired; Former Chairman 1983 1,063 *
and Chief Executive Officer,
Laser Precision Corp.
Edward J. Walsh 67 President, The Sparta Group, 1988 1,250 *
Ltd.
Executive Officers
Michael L. Freeman 46 Vice President Operations and N/A 17,987(6) *
Chief Information Officer,
WD-40 Company
Geoffrey J. Holdsworth 37 Managing Director Asia/Pacific N/A 10,824(7) *
WD-40 Company (Australia)
Pty. Limited
Graham P. Milner 45 Senior Vice President, N/A 27,489(8) *
The Americas, WD-40 Company
-3-
<PAGE>
William B. Noble 41 Managing Director Europe, N/A 19,613(9) *
WD-40 Company Ltd. (U.K.)
Thomas J. Tranchina 51 Vice President Finance, Chief N/A 5,650(10) *
Financial Officer and Treasurer,
WD-40 Company
All Directors and Executive
Officers as a Group 2,349,813(11)
</TABLE>
* Less than one (1) percent.
(1) All shares owned directly unless otherwise indicated.
(2) Mr. Crivello has sole voting and investment power over 885,514
shares held in trust for the benefit of his mother and remainder
beneficiaries. He also has sole voting and investment power over
14,780 shares held as custodian for children and 95,208 shares
held directly.
(3) Mr. Harmsen has sole voting and investment power over 400 shares
held in trust for others and 6,000 shares held directly.
(4) Mr. Ridge has the right to acquire 36,770 shares upon exercise of
stock options. Mr. Ridge has voting power over shares held
under the Company's Employee Stock Ownership Plan.
(5) Mrs. Roulette has sole voting and investment power over all
shares held in trust for herself and remainder beneficiaries.
(6) Mr. Freeman has the right to acquire 15,187 shares upon exercise
of stock options. Mr. Freeman has voting power over shares
held under the Company's Employee Stock Ownership Plan.
(7) Mr. Holdsworth has the right to acquire 10,524 shares upon
exercise of stock options.
(8) Mr. Milner has the right to acquire 25,857 shares upon exercise
of stock options. Mr. Milner has voting power over shares
held under the Company's Employee Stock Ownership Plan.
(9) Mr. Noble has the right to acquire 19,513 shares upon exercise of
stock options.
(10) Mr. Tranchina has the right to acquire 4,335 shares upon exercise
of stock options. Mr. Tranchina shares investment power over
260.5 shares owned by his parents.
(11) Total includes the rights of executive officers to acquire
112,186 shares upon exercise of stock options and also includes
shares held under the Company's Employee Stock Ownership Plan
over which individual executive officers have voting power.
NOMINEES FOR ELECTION AS DIRECTORS
John S. Barry joined the Company in 1969 as President, became a Director in
1970 and served as Treasurer from 1972 until 1989. He served as Chief Executive
Officer from 1990 until 1992. Mr. Barry was elected Chairman of the Board in
1990.
Mario L. Crivello was elected to the Board of Directors in 1994 following
the death of his father, Sam Crivello, a Company founder. Mr. Crivello is
retired, having been the managing owner and master of Tuna Purse Seiners.
Daniel W. Derbes was elected to the Board of Directors in 1984. He is
President of Signal Ventures, a venture capital firm. Mr. Derbes served as
President of Allied-Signal International, Inc. and Executive Vice President of
the parent corporation until his retirement in 1988. Mr. Derbes is also a
director of Sempra Energy
-4-
<PAGE>
Corporation (and its subsidiaries, San Diego Gas & Electric Company, Pacific
Enterprises, Enova Corporation and Southern California Gas Co.) as well as
Oak Industries, Inc.
Harlan F. Harmsen practiced law in San Diego, California from 1957 to
1989. He has been a Director of the Company since 1977 and was named
Secretary of the Company in 1982.
Jack L. Heckel was elected to the Board of Directors in 1984. He served
as President and Chief Operating Officer of GenCorp from 1987 through 1993.
He was named President of Aerojet General (a division of GenCorp) in 1981 and
was elected Chairman of the Board in 1984. Mr. Heckel joined Aerojet General
in 1956 and served as a Group Vice President from 1977 through 1981. Mr.
Heckel is also a director of Advanced Tissue Sciences, Inc. and Applied Power
Corporation.
Garry O. Ridge joined WD-40 Company in 1987 as Managing Director, WD-40
Company (Australia) Pty. Limited and he was responsible for company
operations throughout the Pacific and Asia. Mr. Ridge transferred to the
corporate office in September 1994 as Director - International Operations and
was elected Vice President - International in June 1995. He was elected to
the position of Executive Vice President/Chief Operating Officer in December
1996 and he was named President and Chief Executive Officer as of October 1,
1997. He was also elected to the Board of Directors on November 25, 1997.
Prior to joining WD-40 Company Mr. Ridge was Managing Director of Mermax
Pacific Pty. Ltd. and held a number of senior management positions with
Hawker Pacific Pty. Ltd. (A Hawker Siddeley PLC Group Company) which was a
licensee for WD-40 until 1988.
Margaret L. Roulette is the sister of Mrs. John S. Barry and is the
widow of Robert S. Roulette, a former Director and founder of the Company.
Mrs. Roulette is an investor. She has been a Director since 1977.
Gerald C. Schleif joined the Company in 1969 as Marketing Manager. Mr.
Schleif served as Chief Executive Officer from 1992 and as Company President
from 1990 through September 1997. He held the offices of Vice
President-Marketing, Executive Vice President, Treasurer and Chief Operating
Officer. Mr. Schleif has been a Director since 1989.
C. Fredrick Sehnert has been a Director of the Company since 1983.
Mr. Sehnert served as Chairman and Chief Executive Officer of Laser Precision
Corp. from 1991 through 1994. Previously, he served as President of Wavetek
Corporation from 1988 until 1991 and he was President of Software Products
International, Inc. from 1986 until 1988. Mr. Sehnert was employed by
Kratos, Inc. from 1976 through 1984, serving as Chairman and Chief Executive
Officer from 1981 until 1984.
Edward J. Walsh was elected to the Board of Directors in 1988. He is
President of The Sparta Group, Ltd., a business consulting organization.
Mr. Walsh was employed by The Dial Corporation and its predecessor,
Armour-Dial Corporation, for 27 years, serving as its President and Chief
Executive Officer from 1984 to 1987. He is also a director of Guest Supply,
Inc. and Nortrust of Arizona Holding Corporation.
RELATED PARTY TRANSACTION
The Company's Operations Manager is Randall Barry who is the son of
John S. Barry. Randall Barry has been an employee of the Company since 1984.
For fiscal year 1999, Randall Barry received total cash compensation in the
amount of $95,755 and employer contributions to the Company's Pension and
Profit Sharing Plans were allocable to his account in the amount of $17,552.
-5-
<PAGE>
COMPENSATION, COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
In September 1998, the Board of Directors adopted new policies for the
compensation of outside directors effective January 1, 1999. Each outside
director receives an annual fee of $15,000, payable in quarterly
installments. In February 1999, the Board adopted a Non-Employee Director
Restricted Stock Plan to provide for the issuance of 250 shares of restricted
common stock of the Company to each non-employee member of the Board of
Directors in lieu of $5,000 of cash compensation. The issuance of shares in
lieu of cash compensation is mandatory for any director who does not hold
shares of the Company having a fair market value of at least $50,000 and
optional for all other directors. The shares do not become vested for resale
for a period of five years except in the event of death or retirement from
the Board. The number of shares to be issued will be reviewed annually to
account for changes in the price of the shares on the open market.
There were four scheduled meetings of the Board of Directors during the
last fiscal year. All directors attended at least 75 percent of the aggregate
of the total number of meetings of the Board and of all committees on which
the director served. The Board of Directors has an Audit Committee, a
Governance and Nominating Committee, and a Compensation Committee.
The Audit Committee is comprised of Edward J. Walsh (Chairman), Jack L.
Heckel and C. Fredrick Sehnert. One meeting was held during the last fiscal
year to consider the annual audit and review the audit with the independent
accountants after its completion. The Audit Committee also provides its
recommendations to the full Board of Directors with respect to the selection
and appointment of independent accountants for the Company.
The Governance and Nominating Committee is comprised of Daniel W. Derbas
(Chairman), John S. Barry, Jack L. Heckel and Garry O. Ridge. Two meetings
were held during the last fiscal year. The Governance and Nominating
Committee was established to provide for regular evaluation of succession
plans and the performance, independence, qualifications and integrity of both
the Board of Directors and the management of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee for the past fiscal year was comprised of
Daniel W. Derbas (Chairman), Jack L. Heckel, C. Fredrick Sehnert and Edward J.
Walsh, all of whom are outside directors.
The function of the Compensation Committee is to provide guidance to the
Board of Directors and oversight for all executive compensation and benefit
programs. The Committee provides recommendations for base salary and
incentive compensation awards for the CEO and executive officers. The
Compensation Committee also serves as the Stock Option Committee with
authority to grant options and administer the Company's Incentive Stock
Option Plans. The Compensation Committee met twice during the last fiscal
year.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's stock, to file with the Securities Exchange
Commission initial reports of stock ownership and reports of changes in stock
ownership. Reporting persons are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file.
-6-
<PAGE>
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during the last fiscal year and written
representations that no other reports were required, all Section 16(a)
requirements were complied with by all persons required to report with
respect to the Company's stock during the last fiscal year.
ITEM NO. 2
----------
REINCORPORATION IN DELAWARE
The Board has unanimously approved a proposal to change the Company's
state of incorporation from California to Delaware. For the reasons set forth
below, the Board believes that the best interests of the Company and its
shareholders will be served by such a reincorporation. The Board urges
shareholders to read this section of the Proxy Statement and the related
appendices carefully before voting on the proposed reincorporation.
Throughout this section of the Proxy Statement, the term "WD-40
California" refers to WD-40 Company, the existing California corporation, the
term "WD-40 Delaware" refers to the new Delaware corporation of the same name
(which is currently a wholly-owned subsidiary of WD-40 California and which
would be the successor to WD-40 California in the proposed reincorporation)
and the term "Company" refers to WD-40 California or WD-40 Delaware, as
appropriate in the context.
The Company proposes to accomplish the reincorporation by merging WD-40
California into WD-40 Delaware. Upon completion of this merger, WD-40
California would cease to exist. WD-40 Delaware would succeed to all of the
assets and liabilities of WD-40 California and would operate the business of
the Company from that time forward. Pursuant to an Agreement and Plan of
Merger (the "Merger Agreement"), each outstanding share of common stock of
WD-40 California would automatically convert into one share of common stock,
par value $0.001 per share, of WD-40 Delaware. After the proposed
reincorporation, each stock certificate representing issued and outstanding
shares of WD-40 California common stock would represent the same number of
shares of WD-40 Delaware common stock.
Shareholders would not need to exchange their existing stock
certificates for stock certificates of WD-40 Delaware. The common stock of
the Company would continue to be traded on the Nasdaq National Market,
without interruption, under the same symbol "WDFC" used by WD-40 California
prior to the reincorporation. The name of the Company would not change as a
result of the proposed reincorporation, nor would the reincorporation result
in any change in the Company's business, assets or liabilities. The location
of the Company's principal executive offices and all of its operations would
remain the same. In addition, each outstanding option or right to acquire
shares of WD-40 California common stock would be converted into an option or
right to acquire an equal number of shares of WD-40 Delaware common stock,
under the same terms and conditions as the original options or rights. WD-40
Delaware would adopt and continue all of the employee benefit plans of WD-40
California, including the Company's 1981 and 1990 Incentive Stock Option
Plans.
California law requires the affirmative vote of a majority of the
outstanding shares of WD-40 California common stock for the approval of the
proposed reincorporation. If the holders of a majority of such shares approve
the proposal as required by California law, the proposal will have been duly
approved by the shareholders, and the Board anticipates that the proposal
would be implemented as soon as practicable following the Annual Meeting of
Shareholders. If the shareholders do not approve the proposal then the
proposal will not be implemented. The Merger Agreement allows the Company to
abandon the implementation of the proposal, even after the shareholders have
approved it, if the Board decides that implementation of the proposal will
not serve the best interests of the shareholders. The Board may not amend the
principal terms of the Merger Agreement without shareholder approval, but may
otherwise amend the Merger Agreement before it becomes effective.
-7-
<PAGE>
Pursuant to Item No. 3 below (regarding an "Increase in Authorized
Shares of Common Stock"), the Board is seeking shareholder approval of an
increase in the Company's authorized number of shares of common stock (from
18,000,000 to 36,000,000). If the reincorporation proposal is approved but
the proposal to increase the authorized number of shares of common stock is
not approved, the Certificate of Incorporation of WD-40 Delaware will be
modified prior to the reincorporation to provide for the authorization of
only 18,000,000 shares of common stock.
APPROVAL BY THE SHAREHOLDERS OF THE REINCORPORATION PROPOSAL WILL
CONSTITUTE (i) APPROVAL OF THE MERGER AGREEMENT AND THE CERTIFICATE OF
INCORPORATION AND BYLAWS OF WD-40 DELAWARE, COPIES OF WHICH ARE INCLUDED IN
THIS PROXY STATEMENT AS APPENDICES A, B AND C, (ii) APPROVAL OF THE FORM OF
INDEMNIFICATION AGREEMENT OF WD-40 DELAWARE FOR ITS OFFICERS AND DIRECTORS, A
COPY OF WHICH IS INCLUDED IN THIS PROXY STATEMENT AS APPENDIX D, AND (iii)
THE ADOPTION AND ASSUMPTION BY WD-40 DELAWARE OF THE EMPLOYEE BENEFIT PLANS
OF WD-40 CALIFORNIA.
The discussion below is qualified in its entirety by reference to the
Merger Agreement, the Articles of Incorporation and Bylaws of WD-40
California, the Certificate of Incorporation and Bylaws of WD-40 Delaware,
the Indemnification Agreements of WD-40 California and WD-40 Delaware, the
California General Corporation Law and the Delaware General Corporation Law.
PRINCIPAL REASONS FOR REINCORPORATION
As the Company plans for the future, the Board and management believe
that it is essential to be able to draw upon well established principles of
corporate governance in making legal and business decisions. The prominence
and predictability of Delaware corporate law provide a reliable foundation on
which the Company's governance decisions can be based, and the Board and
management believe that shareholders will benefit from the responsiveness of
Delaware corporate law to their needs and to the needs of the Company.
For many years, Delaware has followed a policy of encouraging
incorporation in Delaware and, in furtherance of that policy, has long been
the leader in adopting, construing and implementing comprehensive, flexible
corporate laws responsive to the legal and business needs of corporations.
The Delaware General Corporation Law is widely regarded as the most extensive
and well-defined body of corporate law in the United States. Many
corporations have initially chosen Delaware for their state of incorporation
or have subsequently changed their corporate domicile to Delaware in a manner
similar to that proposed by WD-40 California. Because of Delaware's
prominence as the state of incorporation for many major corporations, both
the legislature and courts in Delaware have demonstrated an ability and a
willingness to act quickly and effectively to meet changing business needs.
Moreover, the Delaware courts have developed considerable expertise in
dealing with corporate issues and a substantial body of case law has been
developed construing Delaware law and establishing public policies with
respect to corporate legal affairs. Furthermore, there is substantial
judicial precedent in the Delaware courts as to the legal principles
applicable to the conduct of the Board under the business judgment rule. The
Company believes that its shareholders will benefit from the well-established
and flexible principles of corporate governance that Delaware law affords.
Delaware, like many other states, permits a corporation to adopt a
number of measures through amendment of the corporate charter or bylaws or
otherwise, which measures are designed to reduce a corporation's
vulnerability to unsolicited takeover attempts. The reincorporation proposal
is not being proposed in order to prevent any present attempt known to the
Board to acquire control of the Company or to obtain representation on the
Board.
-8-
<PAGE>
The Board has considered, and may consider in the future, certain
defensive strategies designed to enhance the Board's ability to negotiate
with an unsolicited bidder. These strategies include, but are not limited to,
elimination of the shareholders' ability to act by written consent, the
implementation of a classified board, the implementation of requirements for
advance notice of any action to be taken at a shareholders' meeting,
severance agreements for management and key employees which become effective
upon the occurrence of a change in control of the Company and the
authorization of preferred stock (the rights and preferences of which could
be determined by the Board). Some of these measures may be implemented under
California law. There is nonetheless substantial judicial precedent in the
Delaware courts as to the legal principles applicable to such defensive
measures and as to the conduct of a board under the business judgment rule
with respect to unsolicited takeover attempts.
In addition to the defensive strategies noted above, the Board has
considered the possibility of adopting a stockholder rights plan as a defense
against potentially abusive takeover tactics, and may adopt one after the
reincorporation is approved. Such a plan would provide for substantial
dilution of the percentage of stock held by any person who acquires enough
stock to exercise substantial control over the Company without previously
obtaining the approval of the Board. When used responsibly by a board, a
stockholder rights plan can prevent abusive takeover tactics and protect the
long-term interests of stockholders. The Board believes that the shareholders
will benefit if a potential acquiror of the Company must negotiate directly
with the Board, which can conduct negotiations with a full understanding of
the Company's long-term business plan and the long-term value of the
Company's assets. Delaware courts have approved adoption of stockholder
rights plans and the responsible use of a stockholder rights plan by a board
to protect the long-term interests of stockholders from dangers associated
with a hostile takeover attempt. The validity of stockholder rights plans
remains less certain under California law. The proposed reincorporation would
therefore allow the Board to adopt a stockholder rights plan, should it elect
to do so in the future, with confidence as to the validity of the measure in
the Company's state of incorporation.
POSSIBLE DISADVANTAGES
Despite the unanimous belief of the Board that the reincorporation
proposal is in the best interests of the Company and its shareholders, it
should be noted that Delaware law has been criticized by some commentators on
the grounds that it does not afford minority shareholders the same
substantive rights and protections as are available in a number of other
states. For a comparison of shareholders' rights and the powers of management
under Delaware and California law, see "Significant Differences Between the
Corporation Laws of California and Delaware."
CHARTERS AND BYLAWS OF WD-40 CALIFORNIA AND WD-40 DELAWARE
The provisions of the Certificate of Incorporation and Bylaws of WD-40
Delaware are similar to those of the Articles of Incorporation and Bylaws of
WD-40 California in many respects. There are certain differences, however,
including those which are noted immediately below. Moreover, certain
differences under the laws of Delaware and California, as they affect the
charter and bylaws of a company, are also noted below (see "Significant
Differences Between the Corporation Laws of California and Delaware").
Approval by shareholders of the reincorporation proposal will constitute an
approval of the Certificate of Incorporation and Bylaws of WD-40 Delaware and
of each of the provisions set forth therein (see Appendices B and C hereto,
respectively).
SHAREHOLDER POWER TO CALL SPECIAL MEETINGS
Under California law, a special meeting of shareholders may be called by
the Board, the Chairman of the Board, the President, the holders of shares
entitled to cast not less than 10% of the votes at such meeting and such
persons as are authorized by the articles of incorporation or bylaws. Under
Delaware law, a special meeting of stockholders may be called by the Board or
by any other person authorized to do so in the certificate of incorporation
or the bylaws. Stockholders of a Delaware corporation do not have the right
to call a special meeting unless authorized under the corporation's
certificate of incorporation or bylaws. Since the Bylaws and Certificate of
Incorporation of WD-40 Delaware do not contain provisions permitting any
person to call a special stockholders meeting, only the Board of Directors of
WD-40 Delaware will have this ability. By not providing for the right of
stockholders to call special meetings, it may be more difficult for the
stockholders of WD-40 Delaware to initiate action opposed by the Board of
Directors other than at the annual meeting of stockholders. However, it will
not impair the rights of stockholders to elect the full Board of Directors at
an annual meeting or to take action on other issues at that time.
CUMULATIVE VOTING
Under California law, any shareholder may cumulate his or her votes in
the election of Directors upon proper notice of his or her intention to do
so, except that corporations listed on the American or New York Stock
Exchanges or with securities qualified for trading on the Nasdaq National
Market, such as the Company, may eliminate cumulative voting with shareholder
approval. Although the Articles of Incorporation of WD-40 California do not
provide for cumulative voting, such rights have not been eliminated by the
Company under California law and are thus available for shareholders of WD-40
California.
Under Delaware law, cumulative voting in the election of directors is
not mandatory, and such rights will not exist unless provision is made
therefore in a corporation's certificate of incorporation. The Certificate of
Incorporation of WD-40 Delaware does not provide for cumulative voting. As a
result, the holder or holders of shares representing a majority of the votes
entitled to be cast in an election of directors for WD-40 Delaware will be
able to elect all directors then being elected. The absence of cumulative
voting could have the effect of preventing representation of minority
stockholders on the Board of Directors of WD-40 Delaware. However, the Board
believes that, in general, and especially in publicly-held companies, each
director should represent the interests of all stockholders rather than the
interests of a special constituency, and that the presence on the Board of one
or more directors representing such a constituency could disrupt and impair the
efficient management of WD-40 Delaware.
-9-
<PAGE>
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
CHANGES IN THE SIZE OF THE BOARD
Under California law, although changes in the number of directors must
in general be approved by the shareholders, the shareholders may approve a
provision in a corporation's articles of incorporation or bylaws setting
forth a permissible range in the number of directors and the board may fix
the exact number of directors within such stated range. Delaware law permits
corporations to provide in their certificates of incorporation that their
boards are empowered to change the authorized number of directors by
amendment to the bylaws or in the manner provided in the bylaws unless the
number of directors is fixed in the certificate of incorporation, in which
case a change in the number of directors may be made only by amendment to the
certificate of incorporation. Like the Bylaws of WD-40 California, the Bylaws
of WD-40 Delaware have set a variable range of nine (9) to twelve (12) for
the number of directors and, except for fixing the number within such range,
require stockholder approval for any modification of such provision. Thus,
like WD-40 California, except for modifications of the fixed number of
Directors within the range of nine (9) to twelve (12) Directors, changes in
the number of Directors will require approval of the stockholders of WD-40
Delaware.
CLASSIFIED BOARD OF DIRECTORS
California law generally requires that directors be elected annually but
permits a classified board if (a) the corporation is listed on a national
stock exchange or (b) the corporation's shares are quoted on the Nasdaq
National Market and are held by at least 800 shareholders. Under California
law, such a listed corporation may, with the approval of its shareholders,
divide its board into two or three classes by adopting amendments to its
articles of incorporation or bylaws. California law requires that a
corporation that adopts a classified board must have at least six directors
authorized if it divides its board into two classes, and must have at least
nine directors authorized if it divides its board into three classes.
Delaware law permits a corporation to have a classified board, but unlike
California law, does not prescribe a minimum number of directors.
REMOVAL OF DIRECTORS
Under California law, shareholders may remove a director, with or
without cause, by the affirmative vote of a majority of the outstanding
shares, unless the corporation has a classified board. If the corporation has
a classified board, shareholders cannot remove a director if other
shareholders cast votes against the removal in a number sufficient to elect
the director under cumulative voting. Under Delaware law, stockholders can
remove a director on a classified board only for cause, unless the
certificate of incorporation provides otherwise.
INDEMNIFICATION AND LIMITATION OF PERSONAL MONETARY LIABILITY OF DIRECTORS
The Certificate of Incorporation of WD-40 Delaware eliminates the
liability of Directors to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a Director to the fullest extent
permissible under Delaware law, as it exists currently and as it may be
amended in the future. Similarly, the Articles of Incorporation of WD-40
California eliminate the liability of Directors to the Company to the fullest
extent permissible under California law. The provision eliminating monetary
liability of directors in the Certificate of Incorporation of WD-40 Delaware
is potentially more expansive than the corresponding provision in the
Articles of Incorporation of WD-40 California, because it incorporates future
amendments to Delaware law with respect to the elimination of such liability.
However, no such future amendments are contemplated to the knowledge of the
Board, and the Board does not consider the difference to be material.
California and Delaware have similar laws allowing a corporation to indemnify
its officers, directors, employees and other agents. With certain exceptions,
the laws of both states also permit a corporation to adopt charter provisions
eliminating the liability of a director to
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<PAGE>
the corporation or its shareholders for monetary damages for breach of the
director's fiduciary duty. This section describes the differences between the
laws of the two states with regard to indemnification and limitation of
director liability.
Under Delaware law, a corporation may not eliminate or limit director
monetary liability for: (a) breaches of the director's duty of loyalty to the
corporation or its stockholders; (b) acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law; (c) the
payment of unlawful dividends or unlawful stock repurchases or redemptions;
or (d) transactions in which the director receives an improper personal
benefit. Delaware law also prohibits a corporation from limiting a director's
liability for violations of federal or state securities laws, and does not
allow the corporation to affect the availability of non-monetary remedies,
such as injunctive relief or rescission, in actions against its directors.
California law prohibits the elimination of monetary liability where such
liability is based on: (a) intentional misconduct or knowing and culpable
violation of law; (b) acts or omissions that a director believes to be
contrary to the best interests of the corporation or its shareholders or that
involve the absence of good faith on the part of the director; (c) receipt of
an improper personal benefit; (d) acts or omissions that show reckless
disregard for the director's duty to the corporation or its shareholders,
where the director, in the ordinary course of performing a director's duties,
should be aware of a risk of serious injury to the corporation or its
shareholders; (e) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
corporation and its shareholders; (f) transactions between the corporation
and a director who has a material financial interest in such transaction; and
(g) liability for improper distributions, loans or guarantees.
California law requires indemnification when an individual director
successfully defends an action on the merits, while Delaware law requires
indemnification whether the defense is successful or, under circumstances
described below, unsuccessful, on the merits or otherwise. Delaware law
generally permits indemnification of expenses, including attorneys' fees,
which a director actually and reasonably incurs in the defense or settlement
of a derivative or third-party action, if a majority of a disinterested quorum
of the directors, independent legal counsel or a majority of a quorum of the
stockholders determines that the person seeking indemnification acted in good
faith and in a manner reasonably believed to be in the best interests of the
corporation. Without court approval, however, a corporation may not indemnify
a director in a derivative action in which the director is adjudged liable for
negligence or misconduct in the performance of his or her duty to the
corporation. Delaware law requires indemnification of expenses when the
indemnified individual has successfully defended any action, claim, issue or
matter therein, on the merits or otherwise. Under Delaware law and California
law, a corporation may advance expenses that the officer or director will
incur in defending an action, if the officer or director undertakes to
reimburse the corporation if he or she is ultimately not entitled to
indemnification. In addition, the laws of both states authorize a corporation
to purchase insurance for the benefit of its officers, directors, employees
and agents, whether or not the corporation would have the power to indemnify
against the liability covered by the policy. California law also permits a
California corporation to provide rights to indemnification beyond those
provided by law. Accordingly, the Articles of Incorporation of WD-40
California permit indemnification beyond that expressly mandated by California
law, in addition to limiting Director monetary liability to the extent
permitted by California law. Delaware law also permits a Delaware corporation
to provide indemnification in excess of that provided by statute. In contrast
to California law, however, Delaware law does not require provisions in the
certificate of incorporation authorizing additional indemnification, and does
not contain express prohibitions on indemnification in certain circumstances.
In any event, the Certificate of Incorporation of WD-40 Delaware permits
indemnification beyond that expressly mandated by Delaware law, in addition to
limiting Director monetary liability to the extent permitted by Delaware law,
and the relevant provision of the Certificate of Incorporation also
incorporates future amendments to Delaware law with respect to potentially
broader indemnification. As in California, the Delaware courts may limit
indemnification based on principles of public policy.
As authorized by WD-40 California's Articles of Incorporation specifically
approved by the shareholders in 1988, the Company entered into indemnification
agreements with its directors in 1994. If the reincorporation proposal is
approved, WD-40 Delaware will enter into indemnification agreements with its
officers and directors, under Delaware law, in substantially the form included
in this Proxy Statement as Appendix D and a vote for reincorporation will also
constitute approval of such indemnification agreements.
-11-
<PAGE>
SHAREHOLDER DERIVATIVE SUITS
California law provides that a shareholder bringing a derivative action
on behalf of a corporation need not have held shares at the time of the
transaction in question if the shareholder meets certain requirements. Under
Delaware law, on the other hand, a stockholder may bring a derivative action
on behalf of the corporation only if the stockholder was a stockholder of the
corporation at the time of the transaction in question or if he or she later
received the stock by operation of law. California law also provides that the
corporation or the defendant in a derivative suit may make a motion to the
court for an order requiring the plaintiff shareholder to furnish a security
bond. Delaware does not have a similar bonding requirement.
DIVIDENDS AND REPURCHASES OF SHARES
Under California law, any dividends or other distributions to
shareholders, such as redemptions, are limited to the greater of (a) the
corporation's retained earnings or (b) an amount that would leave the
corporation with assets (excluding certain intangible assets) equal to at
least 125% of its liabilities (excluding certain deferred items) and current
assets equal to at least 100% (or, in certain circumstances, 125%) of its
current liabilities. Delaware law allows the payment of dividends and the
redemption of stock out of surplus (including paid-in and earned surplus) or
out of net profits for the current and immediately preceding fiscal years.
INSPECTION OF SHAREHOLDER LISTS
Both California and Delaware law allow any shareholder to inspect a
corporation's shareholder list for a purpose reasonably related to such
person's interest as a shareholder. California law provides, in addition, for
an absolute right to inspect and copy the corporation's shareholder list by
persons holding an aggregate of five percent or more of the corporation's
voting shares, or shareholders holding an aggregate of one percent or more of
such shares who are contesting an election of directors. Delaware law also
provides stockholders with the right to inspect a list of stockholders
entitled to vote at a meeting, within a ten-day period preceding the meeting,
for any purpose germane to the meeting. Delaware law contains no provisions
comparable to the absolute right of inspection provided to certain
shareholders by California law.
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<PAGE>
STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS
Section 203 of the Delaware General Corporation Law prohibits a Delaware
corporation from engaging in a business combination with an interested
stockholder for three years after the person or entity becomes an interested
stockholder. With certain exceptions, an interested stockholder is a person
or entity that owns, individually or with or through certain other persons or
entities, 15% or more of the corporation's outstanding voting stock,
including any rights to acquire stock pursuant to an option, warrant,
agreement, arrangement or understanding, or on the exercise of conversion or
exchange rights, and stock with respect to which the person has voting rights
only. The three-year moratorium imposed on business combinations by section 203
does not apply if (a) the board of the subject corporation approves either
the business combination or the transaction that resulted in the person or
entity becoming an interested stockholder before the stockholder becomes an
interested stockholder; (b) on consummation of the transaction that makes him
or her an interested stockholder, the interested stockholder owns at least
85% of the corporation's voting stock outstanding at the time the transaction
commenced, excluding from the 85% calculation shares owned by directors who
are also officers of the subject corporation and shares held by employee
stock plans that do not give employee participants the right to decide
confidentially whether to accept a tender or exchange offer; or (c) on or
after the date the person or entity becomes an interested stockholder, the
board approves the business combination and the business combination is also
approved at a stockholder meeting by two-thirds of the outstanding voting
stock not owned by the interested stockholder. Although a Delaware
corporation to which section 203 applies may elect not to be governed by
section 203, the Board intends that the provisions of section 203 will apply
to WD-40 Delaware. The Board believes that most Delaware corporations have
availed themselves of this statute and have not opted out of section 203. The
Board also believes that section 203 will encourage any potential acquiror to
negotiate with the Board. Section 203 might also limit the ability of a
potential acquiror to make a two-tiered bid for WD-40 Delaware that does not
treat all stockholders equally. The application of section 203 to WD-40
Delaware will confer on the Board the power to reject a proposed business
combination in certain circumstances, even though a potential acquiror may be
offering a substantial premium over the market price for WD-40 Delaware's
shares. Section 203 would also discourage certain potential acquirors
unwilling to comply with its provisions.
California law requires that holders of common stock receive common
stock in a merger of a target corporation with (a) the holder of more than
50% but less than 90% of the target's common stock or (b) its affiliate,
unless all of the target's shareholders consent to the transaction. This
provision of California law may render a "cash-out" merger by a majority
shareholder more difficult to accomplish. Although Delaware law does not
parallel California law in this respect, under some circumstances section 203
provides similar protection to stockholders against coercive two-tiered bids
for a corporation in which the stockholders are not treated equally.
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<PAGE>
In addition to the provisions of section 203, the Certificate of
Incorporation of WD-40 Delaware (in Article V) will include the provisions of
the Articles of Incorporation of WD-40 California which require approval of
any business combination involving a direct or indirect 10% stockholder of
the Company by holders of at least 85% of the Company's voting stock unless
certain requirements are met (such as Board approval of the business
combination in advance of the 10% stockholder's acquisition of such stake).
APPRAISAL RIGHTS
Under both California and Delaware laws, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights pursuant to which the
shareholder may receive in cash the fair market value of his or her shares in
lieu of the consideration he or she would otherwise receive in the
transaction. The limitations on the availability of appraisal rights under
California law differ from those under Delaware law. Under Delaware law, fair
market value is determined exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation, and such
appraisal rights are not available: (a) with respect to the sale, lease or
exchange of all or substantially all of the assets of a corporation; (b) with
respect to a merger or consolidation by a corporation the shares of which are
either listed on a national securities exchange, designated as a Nasdaq
National Market Security or held of record by more than 2,000 holders if such
stockholders receive only shares of the surviving corporation or shares of
any other corporation that are either listed on a national securities
exchange, designated as a Nasdaq National Market Security or held of record
by more than 2,000 holders, plus cash in lieu of fractional shares of such
corporations; or (c) to stockholders of a corporation surviving a merger if
no vote of the stockholders of the surviving corporation is required to
approve the merger under Delaware law. In contrast, shareholders of a
California corporation whose shares are listed on a national securities
exchange generally have appraisal rights if the holders of at least five
percent of the class of outstanding shares claim the right, or the
corporation or any law restricts the transfer of such shares. Appraisal
rights are unavailable if the shareholders of a California corporation or the
corporation itself, or both, immediately prior to the reorganization will own
immediately after the reorganization equity securities constituting more than
five-sixths of the voting power of the surviving or acquiring corporation or
its parent entity. Unlike Delaware law, California law generally affords
appraisal rights in sale of assets reorganizations.
CLASS VOTE FOR CERTAIN REORGANIZATIONS
With certain exceptions, California law requires a majority vote of each
class of shares outstanding to approve mergers, reorganizations, certain
sales of assets and similar transactions. Delaware law generally does not
require class voting for such transactions, except in certain situations
involving an amendment of the certificate of incorporation that adversely
affects a specific class of shares.
SUPERMAJORITY CHARTER PROVISIONS
California law provides that any provision in a corporation's articles of
incorporation filed on or after January 1, 1989 that requires approval by a
proportion of the outstanding shares larger than a majority will expire in two
years. The specified supermajority of shareholders must therefore re-approve
supermajority requirements every two years. Delaware law contains no such
provision for the expiration of supermajority requirements.
DISSOLUTION
Under California law, shareholders holding 50% or more of the total
voting power may authorize a corporation's dissolution, with or without the
approval of the corporation's board. California corporations may not modify
this right in their articles of incorporation. Under Delaware law, unless the
board approves the proposal to
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<PAGE>
dissolve, all of the stockholders entitled to vote on the dissolution must
unanimously approve the dissolution. If the board initially approves the
dissolution, a simple majority of the outstanding shares of the corporation's
stock entitled to vote may vote to dissolve the corporation. In the event of
such a board-initiated dissolution, Delaware law allows a Delaware
corporation to include in its certificate of incorporation a supermajority
voting requirement. The Certificate of Incorporation of WD-40 Delaware
contains no such supermajority voting requirement.
APPLICATION OF THE GENERAL CORPORATION LAW OF CALIFORNIA AFTER THE PROPOSED
REINCORPORATION
Section 2115 of the California General Corporation Law subjects certain
corporations organized under other states' laws, but which have specified
significant contacts with California, to a number of provisions of the
California General Corporation Law. California law provides an exemption from
section 2115 for corporations whose shares are traded on the Nasdaq National
Market if the corporation has at least 800 stockholders as of the record date
for its most recent meeting of stockholders. Inasmuch as WD-40 California meets
these requirements and the shareholders of WD-40 California will become the
stockholders of WD-40 Delaware, the Board believes that WD-40 Delaware will be
exempt from the provisions of section 2115.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED REINCORPORATION
The reincorporation pursuant to the Merger Agreement is intended to be a
tax-free reorganization under section 368(a) of the Internal Revenue Code of
1986, as amended. Assuming the reincorporation qualifies as a reorganization,
neither WD-40 California nor WD-40 Delaware nor their stockholders would
recognize gain or loss as a result of the proposed reincorporation.
Stockholders would have the same basis in their capital stock of WD-40
Delaware as they have in their capital stock of WD-40 California. Each
stockholder's holding period with respect to WD-40 Delaware stock would
include the period during which such holder held the corresponding WD-40
California stock if the stockholder held the WD-40 California stock as a
capital asset at the time of consummation of the reincorporation. Neither
WD-40 California nor WD-40 Delaware has obtained or intends to request a
ruling from the Internal Revenue Service or an opinion of legal or tax
counsel with respect to the consequences of the reincorporation. THE
FOREGOING IS ONLY A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY OF THE LAWS
OF ANY STATE OR OTHER JURISDICTION.
BOARD RECOMMENDATION AND VOTE REQUIRED
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
REINCORPORATE UNDER DELAWARE LAW. The affirmative vote of a majority of the
Company's outstanding shares is required for approval of the reincorporation
proposal. A vote for the reincorporation proposal will constitute specific
approval of (i) the Merger Agreement and all other transactions and
proceedings relating to the reincorporation, (ii) the Certificate of
Incorporation and Bylaws of WD-40 Delaware, (iii) the form of Indemnification
Agreement of WD-40 Company Delaware for its current and future officers and
directors, and (iv) the assumption by WD-40 Delaware of all leases, stock
options, employment agreements and other obligations of WD-40 California. An
abstention or the failure of a broker or other nominee to vote shares held of
record will have the same effect as a vote against the proposal.
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ITEM NO. 3
----------
INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board has unanimously approved a proposal to increase the authorized
number of shares of common stock from Eighteen Million (18,000,000) to
Thirty-Six Million (36,000,000). For the reasons stated below, the Board
believes that the Company and its shareholders will be served by such an
increase in the authorized common stock of the Company. If approved by the
shareholders, the proposed increase will be effected through inclusion of a
provision for such amount of authorized common stock in the Certificate of
Incorporation for WD-40 Delaware (as discussed in connection with Item No. 2
above to "Reincorporation in Delaware") to be in effect prior to the
consummation of the proposed reincorporation. If the reincorporation proposal
is not consummated for any reason, then the proposed increase will be
effected through an amendment of the Articles of Incorporation of the
Company. The affirmative vote of a majority of the outstanding shares of the
Company's common stock is required for an increase in the number of shares of
authorized common stock.
THE PROPOSAL
The Articles of Incorporation of the Company presently authorize the
issuance of up to Eighteen Million (18,000,000) shares of common stock. The
proposed Certificate of Incorporation for WD-40 Delaware (or the proposed
amendment to the Articles of Incorporation of the Company) will authorize
Thirty-Six Million (36,000,000) shares of common stock. In the instance of
the Certificate of Incorporation for WD-40 Delaware, the common stock will
have a par value of $0.001 per share. In the event that an amendment is made
to the Articles of Incorporation of the Company, the common stock will be
without par value.
PURPOSE AND EFFECT OF THE PROPOSAL
The Company currently has issued and outstanding [ ] shares of
common stock. Accordingly, the number of authorized but unissued shares of
common stock is relatively small (i.e., [ ], or [7. ]% of the total
amount of currently authorized shares). The ability of the Company to issue
additional shares of common stock will provide the Board with greater
flexibility to meet changing market conditions and to take advantage of
financial or business opportunities that may arise. The additional shares of
common stock may be used, among other things, to raise new capital for
expansion, to raise capital or serve as consideration in order to finance a
merger with, or acquisition of, another company or to compensate employees,
officers or directors of the Company. Although the Board presently has no
specific plans for any issuance of additional shares of common stock, and the
Company has not entered into any arrangement, agreement or understanding with
respect to any such issuance, the availability of the additional shares of
common stock will permit the Board to issue such shares expeditiously as
appropriate in the best interests of the Company and its shareholders.
The additional Eighteen Million (18,000,000) shares of common stock will
be a part of the existing class of common stock and, if and when issued,
would have the same rights and privileges as the shares of common stock
presently outstanding.
By authorizing additional shares of common stock, the possibility will
exist that such shares could be utilized to make a potential takeover of the
Company more difficult to achieve. For example, if the Board elects to adopt
a shareholder rights plan, the availability of such shares could enhance the
effectiveness of the plan which, in turn, could deter a third party from
attempting a takeover of the Company in the absence of successful
negotiations directly with the Board. However, like other aspects of the
Board's management of the Company in the interests of the shareholders, any
uses of the additional shares of common stock will be subject to the
Directors' responsibility to act in a manner they reasonably believe to be in
the best interests of the Company and its shareholders.
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BOARD RECOMMENDATION AND VOTE REQUIRED
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE INCREASE
IN THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK. Adoption of the amendment
requires the affirmative vote of a majority of the outstanding shares of the
Company's common stock. An abstention or the failure of a broker or other
nominee to vote shares held of record will have the same effect as a vote
against the proposal.
TEXT OF AMENDMENT
The proposal would approve Article IV of the Certificate of
Incorporation of WD-40 Delaware to read in full as set forth in Appendix B
hereto. Alternatively, the proposal would approve Article Fourth of the
Articles of Incorporation to read substantially in full like Article IV of
the Certificate of Incorporation of WD-40 Delaware, except that Article
Fourth of such Articles would not include a designation of par value.
EXECUTIVE COMPENSATION
The following table shows information for the three (3) fiscal years
ended August 31, 1999 concerning the Company's Chief Executive all other
executive officers.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Long Term
Annual Compensation All Other
Fiscal Year Compensation Awards Compensation(2)
Name and Principal Position Ended Aug. 31 Salary ($) Bonus ($) Stock Options(#) ($)
<S> <C> <C> <C> <C> <C>
Garry O. Ridge 1999 $275,000 $106,650 16,000 $26,000(3)
President and 1998 255,000 150,000 16,000 26,000
Chief Executive Officer 1997 145,000 50,000 7,000 25,000
Thomas J. Tranchina 1999 $126,000 $ 29,850 6,000 $24,320(4)
Vice President Finance 1998 36,250 10,000 -0- -0-
and Chief Financial Officer
Graham P. Milner 1999 $149,100 $ 35,150 6,000 $26,000(3)
Senior Vice President, 1998 140,000 55,000 6,000 26,000
The Americas 1997 125,000 40,000 5,000 25,000
Michael L. Freeman 1999 $143,800 $ 33,750 6,000 $26,000(3)
Vice President Operations 1998 135,000 55,000 6,000 26,000
and Chief Information Officer 1997 105,000 30,000 5,000 23,500
William B. Noble(5) 1999 $172,850 $ 57,600 6,000 $ -0-
Managing Director Europe 1998 154,500 57,900 6,000 -0-
WD-40 Company Ltd. (U.K.) 1997 126,900 36,700 6,000 -0-
Geoffrey J. Holdsworth(5) 1999 $ 69,100 $ 40,150 6,000 $ -0-
Managing Director Asia/Pacific 1998 65,400 12,950 6,000 -0-
WD-40 Company (Australia) 1997 49,250 18,600 5,000 -0-
Pty. Limited
</TABLE>
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<PAGE>
(1) No information for Other Annual Compensation, Restricted Stock Awards
or Long Term Incentive Payouts has been provided because there was no
such reportable compensation awarded to, earned by or paid to the
individuals named.
(2) All Other Compensation includes employer contributions to the
Company's Money Purchase Pension Plan, Profit Sharing Plan and 401(k)
Plan.
(3) Includes $24,000 in contributions to the Company's Money Purchase
Pension Plan and Profit Sharing Plan and $2,207 in matching
contributions to the Company's 401(k) Plan.
(4) Includes $23,378 in contributions to the Company's Money Purchase
Pension Plan and Profit Sharing Plan and $2,207 in matching
contributions to the Company's 401(k) Plan.
(5) Mr. Noble was employed by the Company's U.K. subsidiary in 1997, 1998
and 1999. Mr. Holdsworth was employed by the Company's Australian
subsidiary in 1997, 1998 and 1999. Compensation amounts have been
converted from local currencies at average annual exchange rates for
each year.
STOCK OPTIONS
The following table sets forth stock options granted pursuant to the
Restated WD-40 Company 1990 Incentive Stock Option Plan during the last fiscal
year to each of the Company's executive officers named in the Summary
Compensation Table above.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percent of Total Options
Options Granted Granted to Employees in Exercise Price Grant Date
Name (#) Fiscal Year 1999 ($/Sh) Expiration Date Value(1)
<S> <C> <C> <C> <C> <C>
--------------------------- ------------------- ---------------------------- ---------------- ------------------- --------------
Garry O. Ridge 16,000(2) 9.1% $23.06 9/29/2008 $
Thomas J. Tranchina 6,000(3) 3.4 23.06 9/29/2008
Graham P. Milner 6,000(4) 3.4 23.06 9/29/2008
Michael L. Freeman 6,000(5) 3.4 23.06 9/29/2008
William B. Noble 6,000(6) 3.4 23.06 9/29/2008
Geoffrey J. Holdsworth 6,000(7) 3.4 23.06 9/29/2008
</TABLE>
(1) The Grant Date Value of $ per share has been determined using the
Black-Scholes Option Valuation model. The following assumptions were
used in determining the value: (i) a dividend yield of %; (ii)
expected volatility of 0. ; (iii) a ten-year risk-free rate of
return of %; and (iv) exercise ten years from the grant date.
(2) Mr. Ridge's options are non-qualified options exercisable in full on
September 29, 1999.
(3) Mr. Tranchina's incentive stock options are exercisable as to 4,335
shares on September 29, 1999 and as to 665 shares on January 1, 2000.
(4) Mr. Milner's incentive stock options are exercisable as to 3,563
shares on January 1, 2000 and as to 2,437 shares on January 1, 2001.
(5) Mr. Freeman's incentive stock options are exercisable as to 3,836
shares on January 1, 2000 and as to 2,164 shares on January 1, 2001.
(6) Mr. Noble's incentive stock options are exercisable as to 2,839 shares
on January 1, 2000 and as to 3,161 shares on January 1, 2001.
(7) Mr. Holdsworth's incentive stock options are exercisable as to 4,095
shares on January 1, 2000 and as to 1,905 shares on January 1, 2001.
-18-
<PAGE>
Except as noted for Mr. Ridge, all options granted during the Company's
last fiscal year were granted as Incentive Stock Options. The options may be
exercised for cash or in lieu of cash, an option holder may tender shares of the
Company's common stock previously held by the option holder. In permitting the
exchange of stock upon exercise of options, the Incentive Stock Option Plan
restricts the exercise of options with previously owned stock to shares held for
a minimum of six months.
The following table sets forth the number of shares acquired on exercise of
stock options in the Company's last fiscal year, the aggregate dollar value
realized on exercise of such options and the number and dollar value of
unexercised options as of August 31, 1999 for the Company's executive officers
named in the Summary Compensation Table above.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Options Value of Unexercised In-the-Money
Shares Acquired Value Realized at August 31, 1999 (#)(1) Options at August 31, 1999(2)
Name on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Garry O. Ridge -0- -0- 36,770 17,280 $42,241 $24,912
Thomas J. Tranchina -0- -0- -0- 6,000 -0- 8,622
Graham P. Milner 250 1,031 25,857 6,561 51,944 8,622
Michael L. Freeman 2,300 15,381 15,187 6,363 16,422 8,622
William B. Noble -0- -0- 19,513 7,087 34,263 8,622
Geoffrey J. Holdsworth -0- -0- 10,524 6,176 7,050 8,622
</TABLE>
(1) All historical option grant information has been adjusted to account
for the 2 for 1 stock split on July 11, 1997.
(2) The value of Unexercised In-the-Money Options at August 31, 1999 was
determined based on the difference between the exercise price for such
options and the closing price of $24.50 for the Company's shares as
reported by The Nasdaq Stock Market.
SUPPLEMENTAL DEATH AND RETIREMENT BENEFIT PLANS
Since 1984 the Board of Directors has adopted Supplemental Death Benefit
Plans for certain key employees. Under the Death Benefit Plan agreements, a
participating employee's designated beneficiary or the employee's estate will
receive a death benefit equal to the employee's then current base salary in the
event of death prior to retirement from the Company. No death benefit is payable
if Retirement Benefits become due upon the employee's retirement under the
Retirement Benefit Plan agreement.
Since 1988 the Board of Directors has adopted Supplemental Retirement
Benefit Plans for certain key employees. Under the Retirement Benefit Plan
agreements, participating employees will receive retirement benefits in the
event of the participant's retirement on or after a designated retirement date.
The annual retirement benefit for participating employees will be equal to
twenty-five percent (25%) of the employee's then current base salary, payable in
quarterly installments over a period of fifteen years.
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<PAGE>
All benefits under the plans will be subject to payroll taxes and
required withholding for state and federal income taxes as deferred
compensation. The benefits are funded by key man life insurance policies
purchased and owned by the Company. The Board of Directors determines which
key employees will participate in the plans and the amount of benefits
payable for each participant. Outside directors do not participate in the
plans.
Based upon current (2000) base salaries, the death benefits and annual
retirement benefits to be provided under the plans to the executive officers
named in the Summary Compensation Table above are set forth below. The
retirement benefit will not be payable unless the executive officer retires
with the Company on or after reaching the specified retirement age. In such
event, the actual amount of the annual benefit will be dependent upon the
executive's then current annual salary.
<TABLE>
<CAPTION>
Death Annual Retirement Retirement
Name Benefit Benefit Age
<S> <C> <C> <C>
Garry O. Ridge $295,500 $73,875 65
Graham P. Milner 159,500 39,875 65
Michael L. Freeman 154,000 38,500 65
William B. Noble -0- 45,900 65
Geoffrey J. Holdsworth 74,500 18,600 65
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Mr. Ridge and Mr.
Tranchina for three year terms through August 1, 2002, subject to renewal for
additional three year terms unless otherwise provided by the Board of
Directors. Mr. Ridge will receive an annual base salary of at least $275,000
and Mr. Tranchina will receive an annual base salary of at least $126,000.
Each of the officers will receive such incentive bonuses as may be awarded
from time to time by the Board of Directors based upon the Company's annually
established bonus formula. In the event of a termination of employment without
cause following a change of control of the Company (defined as the acquisition
by tender offer, or other means of change of ownership, of 15% of the
outstanding shares of the Company by a single entity, group or person), Mr.
Ridge and Mr. Tranchina would be entitled to receive an amount equal to three
times their average annual gross salary, including bonuses, for the five years
immediately prior to such termination of employment. In no event will the
payments exceed the limitations of Internal Revenue Code Section 280G(d)(2)
which limit the deductibility of certain payments to executives upon changes
in control.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation philosophy of the Company is to be competitive in the
marketplace, to attract, retain, and motivate a highly qualified workforce.
The Company uses compensation surveys, conducted by independent consultants,
to provide data to support the development of competitive compensation plans
which reinforce this philosophy. The Compensation Committee of the Board of
Directors (the "Committee") determines compensation for the CEO and executive
officers. The Committee also serves as the Stock Option Committee under the
Company's 1981 and 1990 Incentive Stock Option Plans. In evaluating the CEO's
performance, the Committee will measure the year's results against the
specific goals set forth in the annual business plan. In addition to
financial performance, the Committee considers factors important to the
Company such as ethical business conduct, environmental responsiveness, and
the general overall perception of the Company by financial and business
leaders.
The Committee is responsible for setting and administering the policies
which govern executive compensation and the stock ownership programs of the
Company. The members of the Committee are Daniel W. Derbes (Chairman), Jack
L. Heckel, C. Fredrick Sehnert and Edward J. Walsh.
Compensation of the CEO and the CEO's recommendations for the executive
officers is reviewed annually by the Committee. Changes proposed for
executive officers are evaluated and approved by the Committee on an
individual basis. As management responsibilities increase, a greater portion
of compensation is driven by financial performance measures.
-20-
<PAGE>
There are four components in the Company's executive compensation
program:
i. Base salary
ii. Performance Incentive
iii. Pension and Profit Sharing
iv. Long-term Stock Options
The Committee has determined that compensation for the CEO and other
executive officers should be weighted more heavily in favor of performance
factors. Annual Performance Incentives could range between 0-50% of total
cash compensation based on the level of achievement of the current fiscal
year's business plan goals.
BASE SALARY
Base salaries for the CEO and executive officers are established at the
beginning of each fiscal year. Detailed position descriptions, scope and
complexity of the position as well as external market factors are used to
determine base salary levels. Independent compensation surveys such as Wyatt
Data Services are the basis for these comparables and base salary levels are
pegged at the 50-75th percentile for similar companies. The companies
included in these surveys do not necessarily include any of the companies
included in the Peer Group identified with reference to the Stock Performance
Graph that follows this report. Salary changes are based on guidelines
established for all employees using individual performance and comparable
adjustments from midpoint levels for the various job classifications. Mr.
Ridge's base salary for fiscal year 1999 was $275,000. For fiscal year 2000
Mr. Ridge will receive a base salary of $295,500, an increase of 7.5%.
PERFORMANCE INCENTIVE
The Performance Incentive is that substantial portion of the annual
compensation for each executive officer that is related to and contingent
upon the individual's contribution and performance and upon the performance
of the Company as a whole. Consideration is also given to the performance of
any business units under his or her management. The Performance Incentive
bonus can range anywhere from 0-50% of total compensation based primarily on
the level of business plan achievement. In this way, the Company seeks to
encourage continuing focus on increasing the Company's revenue and
profitability and shareholder value while at the same time motivating its
executive officers to perform to the fullest extent of their abilities. Mr.
Ridge's Performance Incentive compensation for fiscal year 1999 was 27.5% of
his total cash compensation.
PENSION AND PROFIT SHARING PLANS
Since 1963 the Company has maintained tax qualified Pension and Profit
Sharing Plans for the benefit of all full time employees, including executive
officers. The Company's present Plans include a Money Purchase Pension Plan
providing for required contributions for participating employees equal to 10%
of their covered compensation, a Profit Sharing Plan providing for
discretionary contributions which will be generally limited to 5% of covered
compensation and a 401(k) Plan which allows employees to defer up to 6.6% of
covered compensation and provides a matching contribution equal to one-half
of the amounts deferred. The Plans serve to provide Company employees with
tax-advantaged retirement savings and to focus the attention of employees on
profits and the effective use of assets.
-21-
<PAGE>
LONG-TERM STOCK OPTIONS
The Company has employed stock options as a means of providing long-term
compensation to its key employees for many years. Options are granted at the
beginning of each fiscal year to executive officers and other employees based
upon the level of management responsibility. Options grants are not generally
based on prior performance or results of operation. The Company's Stock
Option Plan has been established to:
a. Focus attention on corporate strategic business direction; and
b. Increase ownership and retention in the Company's stock, thereby
aligning the interests of the participant employees with those
of the Company's shareholders.
For fiscal year 2000, the Stock Option Committee granted options to
purchase a total of 247,600 shares to company employees (71) at $23.50 per
share on September 28, 1999. In 1997 the Board of Directors significantly
increased the number of employees participating in the Stock Option Plan.
This increase was due to increased employment as well as a decision to
broaden the scope of the Plan to include lower level management employees.
The Board of Directors believes that wider participation will further enhance
employee productivity, loyalty and commitment as well as providing more
employees with an opportunity to benefit from increasing share values.
On September 28, 1999 Mr. Ridge received options to purchase 20,000
shares. Options granted in September 1998 to Mr. Ridge and executive officers
are set forth in the Stock Option Table included above.
The Committee believes the Company has a unique overall compensation
plan which fulfills current Company philosophy and which historically has
been successful in producing increased shareholder value.
Daniel W. Derbes (Chairman)
Jack L. Heckel
C. Fredrick Sehnert
Edward J. Walsh
-22-
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Shares with the cumulative total return of a Peer Group
of consumer product companies and the Standard & Poor's 500 Composite Stock
Index (the "S&P 500 Index") for the five fiscal years ending August 31, 1999.
The comparison assumes $100 invested on August 31, 1994 in the Company's
Common Shares and in each of the indices.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURNS
WD-40 Company, a Peer Group and S&P 500 Index
[INSERT STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Year Ended August 31
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
WD-40 Company 100.00 108.96 121.85 154.87 121.24 144.97
Peer Group 100.00 108.48 122.05 174.20 162.14 197.04
S&P 500 Index 100.00 121.45 144.20 202.81 219.23 306.54
</TABLE>
The Peer Group returns are based upon beginning-of-year market
capitalization weighting of the cumulative returns for the following 14
consumer product companies: Alberto-Culver Co., Church & Dwight, Inc., Enesco
Group, Inc., Kimball International, Lancaster Colony Corp., La-Z-Boy Chair
Co., National Presto Industries, Inc., NCH Corp., Oneida Ltd., RPM Inc.-Ohio,
Royal Appliance Manufacturing Co., Scotts Company, Valspar Corp. and Wynn's
International, Inc. One company, First Brands Corp., has been eliminated from
the Peer Group following the acquisition by Clorox Company.
ITEM NO. 4
----------
RATIFICATION OF INDEPENDENT ACCOUNTANTS
WD-40 Company shareholders will vote to ratify the selection of
PricewaterhouseCoopers LLP as WD-40 Company's independent accountants. A
majority of the votes of the Common Shares present or represented at the
meeting is required for approval. Broker non-votes will be voted in favor of
approval. PricewaterhouseCoopers LLP acted as the Company's independent
public accountants during the past fiscal year and will continue to act in
such capacity during the current fiscal year. It is anticipated that a
representative of PricewaterhouseCoopers LLP will attend the Annual Meeting
of Shareholders, will have an opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
The Company's independent accountants perform audit services (which
include reading filings with the Securities and Exchange Commission as well
as quarterly and annual reports) and tax-related services for the Company.
PricewaterhouseCoopers LLP also provided computer systems consulting services
and assistance with the acquisition of the Lava brand during the past fiscal
year. Before audit services are performed, the Audit Committee approves an
estimated fee. The possible effect on the independence of the accountants is
considered by the Audit Committee. There is no direct or indirect
understanding or agreement that places a limit on current or future years'
audit fees.
-23-
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company not later than
July 12, 2000 to be included in the Proxy Statement and form of Proxy for the
next annual meeting.
By Order of the Board of Directors
Harlan F. Harmsen
Secretary
Dated: November 9, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM
OR FORMS OF PROXY IN THE ENCLOSED ENVELOPE.
-24-
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
December __, 1999, by and between WD-40 Company, a California corporation (the
"California Company"), and WD-40 Company, a Delaware corporation (the "Delaware
Company"), is made with reference to the following facts:
A. The California Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and, on
the date of this Agreement, has authority to issue Eighteen Million (18,000,000)
shares of common stock, no par value ("California Common Stock").
B. On the date of this Agreement, the California Company had issued and
outstanding [__________] shares of California Common Stock.
C. The Delaware Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and, on
the date of this Agreement, has authority to issue Thirty-Six Million
(36,000,000) shares of common stock, $0.001 par value per share ("Delaware
Common Stock").
D. The Delaware Company currently has One Hundred (100) shares of its
common stock issued and outstanding, all of which are owned by the California
Company.
E. The respective Boards of Directors of the California Company and the
Delaware Company have determined that it is advisable and in the best interests
of each such corporation that the California Company be merged with and into the
Delaware Company upon the terms and subject to the conditions provided in this
Agreement for the purpose of effecting a reincorporation of the California
Company in the State of Delaware and have, by resolutions duly adopted, approved
this Agreement and directed that it be submitted to a vote of their respective
shareholders and executed by the undersigned officers.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
When used in this Agreement, the following terms shall have the
following meanings, respectively:
1.1 "CALIFORNIA LAW" shall mean the California Corporations Code as
currently in effect on the date of this Agreement.
1.2 "DELAWARE LAW" shall mean the Delaware General Corporation Law as
currently in effect on the date of this Agreement.
<PAGE>
1.3 "EFFECTIVE TIME" shall mean the date and time when the Merger shall
have become effective, in accordance with Section 2.2 below.
1.4 "MERGER" shall mean the merger of the California Company with and
into the Delaware Company.
1.5 "SURVIVING CORPORATION" shall mean the Delaware Company from and
after the Effective Time.
ARTICLE 2
MERGER
2.1 FILINGS AND EFFECTIVENESS. The Merger shall become effective when
the following actions shall have been completed:
(i) This Agreement and the Merger shall have been adopted
and approved by the sole stockholder of the Delaware Company and the
shareholders of the California Company;
(ii) All of the conditions precedent to the consummation of
the Merger specified in this Agreement shall have been satisfied or
duly waived by the party entitled to satisfaction thereof;
(iii) An executed Certificate of Merger shall have been filed
with the Secretary of State of the State of Delaware; and
(iv) An executed counterpart of this Agreement, along with a
certificate of a duly authorized officer of both the California Company
and the Delaware Company, each meeting the requirements of California
Law, shall have been submitted for filing with the Secretary of State
of the State of California.
2.2 MERGER. The Merger shall become effective for all purposes of
Delaware law when proper documentation has been filed with the Secretary of
State of the State of Delaware in accordance with Section 2.1 above. The Merger
shall become effective for purposes of California law as of the time the Merger
becomes effective in Delaware, once proper documentation has been filed with the
Secretary of State of the State of California in accordance with Section 2.1
above. When the Merger becomes effective, the California Company shall merge
with and into the Delaware Company, the separate existence of the California
Company shall cease, and the Delaware Company shall continue in existence under
Delaware Law.
-2-
<PAGE>
2.3 EFFECTS. At the Effective Time:
(i) the California Company shall be merged with and into the
Delaware Company and the separate existence of the California Company
shall cease;
(ii) the Certificate of Incorporation of the Delaware Company
in effect at the Effective Time shall continue as the Certificate of
Incorporation of the Surviving Corporation;
(iii) the Bylaws of the Delaware Company in effect at the
Effective Time shall continue as the Bylaws of the Surviving
Corporation;
(iv) each director of the California Company immediately
prior to the Effective Time shall become a director of the Surviving
Corporation, each to serve for such term as shall be indicated in the
proxy statement to be submitted to the shareholders of the California
Company in connection with the 1999 annual meeting of shareholders of
the California Company;
(v) each officer of the California Company in office
immediately prior to the Effective Time shall become as an officer in
the same capacity of the Surviving Corporation;
(vi) each share of California Common Stock outstanding
immediately prior to the Effective Time shall be converted into one
share of Delaware Common Stock pursuant to Article 3 below, with an
amount equal to the par value of the Delaware Common Stock to be
allocated to the stated capital account of the Delaware Company, and
all amounts in excess of such amount shown on the books of the
California Company to be allocated to retained earnings or the capital
surplus account, in accordance with good accounting practice; and
(vii) without further transfer, act or deed, the separate
existence of the California Company shall cease and the Surviving
Corporation shall possess all of the rights, privileges, powers and
franchises of a public as well as of a private nature, and shall be
subject to all the restrictions, disabilities and duties of the
California Company; and each and all of the rights, privileges, powers
and franchises of the California Company, and all property, real,
personal and mixed, and all debts due to the California Company on
whatever account, stock subscriptions and other things in action or
belonging to the California Company shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and
franchises, and each and every other interest of the California Company
shall be thereafter as effectually the property of the Surviving
Corporation as they were of the California Company; and the title to
any real estate vested by deed or otherwise, under the laws of the
State of Delaware, in the California Company shall not revert or be in
any way impaired by reason of the Merger; and all rights of creditors
of the California Company and all liens upon any property of the
California Company shall be preserved unimpaired; and all debts,
liabilities and duties of the California Company shall
-3-
<PAGE>
thenceforth attach to the Surviving Corporation and may be enforced
against it to the same extent as if such debts, liabilities and
duties had been incurred or contracted by it.
2.4 FURTHER ASSURANCES. The California Company agrees that if, at any
time after the Effective Time, the Surviving Corporation shall consider or be
advised that any further deeds, assignments or assurances are necessary or
desirable to vest, perfect or confirm in the Surviving Corporation title to any
property or rights of the California Company, the Surviving Corporation and its
proper officers and directors may execute and deliver all such proper deeds,
assignments and assurances and do all other things necessary or desirable to
vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement, in the
name of the California Company or otherwise.
ARTICLE 3
CONVERSION OF SHARES
3.1 CONVERSION OF SHARES. At the Effective Time:
(i) each share of California Common Stock issued and
outstanding immediately prior to the Effective Time shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into one (1) share of Delaware Common Stock; and
(ii) each share of Delaware Common Stock issued and
outstanding immediately prior to the Effective Time shall be canceled
and retired and no shares shall be issued in the Merger in respect
thereof.
3.2 STOCK CERTIFICATES. At and after the Effective Time, all of the
outstanding certificates which immediately prior to the Effective Time represent
shares of California Common Stock shall be deemed for all purposes to evidence
ownership of, and to represent, the shares of Delaware Common Stock into which
the shares of California Common Stock formerly represented by such certificates
have been converted as provided in this Agreement. The registered owner on the
books and records of the Delaware Company or its transfer agents of any such
outstanding stock certificate shall, until such certificate shall have been
surrendered for transfer or otherwise accounted for to the Delaware Company or
its transfer agents, have and be entitled to exercise any voting and other
rights with respect to, and to receive any dividends and other distributions
upon, the shares of Delaware Common Stock evidenced by such outstanding
certificate as above provided.
3.3 STOCK OPTIONS. Each right or option to purchase shares of
California Common Stock granted under the WD-40 Company 1981 Incentive Stock
Option Plan or the WD-40 Company 1990 Incentive Stock Option Plan (collectively,
the "Plans") of the California Company, or granted irrespective and not in
connection with the Plans, which is outstanding immediately prior to the
Effective Time, shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become a right or option to
purchase the same number of shares of Delaware Common Stock at the same price
per share, and upon the same terms and
-4-
<PAGE>
subject to the same conditions (as set forth in an agreement pursuant to a
Plan or otherwise, as applicable), as in effect at the Effective Time. The
same number of shares of Delaware Common Stock shall be reserved for purposes
of the Plans as is equal to the number of shares of California Common Stock
so reserved as of the Effective Time. As of the Effective Time, the Delaware
Company hereby assumes the Plans and any and all obligations of the
California Company under such Plans, including the outstanding options
granted pursuant to the Plans.
3.4 VALIDITY OF DELAWARE COMMON STOCK. All shares of Delaware Common
Stock into which California Common Stock is to be converted pursuant to the
Merger shall not be subject to any statutory or contractual preemptive rights,
shall be validly issued, fully paid and nonassessable and shall be issued in
full satisfaction of all rights pertaining to such California Common Stock.
3.5 RIGHTS OF FORMER HOLDERS. From and after the Effective Time, no
holder of certificates which evidenced California Common Stock immediately prior
to the Effective Time shall have any rights with respect to the shares formerly
evidenced by those certificates, other than to receive the shares of Delaware
Common Stock into which such California Common Stock shall have been converted
pursuant to the Merger.
ARTICLE 4
COVENANTS TO BE PERFORMED PRIOR TO CLOSING DATE
4.1 CONSENTS. Each of the California Company and the Delaware Company
shall use its best efforts to obtain the consent and approval of each person
(other than shareholders of the California Company in their capacities as such)
whose consent or approval shall be required in order to permit consummation of
the Merger.
4.2 GOVERNMENTAL AUTHORIZATIONS. Each of the California Company and the
Delaware Company shall cooperate in filing any necessary reports or other
documents with any federal, state, local or foreign authorities having
jurisdiction with respect to the Merger.
ARTICLE 5
CONDITIONS
The obligations of the California Company and the Delaware Company to
consummate the Merger are subject to satisfaction of the following conditions:
5.1 AUTHORIZATION. The holders of a majority of the California Common
Stock shall have approved and adopted this Agreement and the Merger in
accordance with California Law. All necessary action shall have been taken to
authorize the execution, delivery and performance of this Agreement by the
California Company and the Delaware Company. The California Company and the
Delaware Company shall have full power and authority to consummate the Merger.
-5-
<PAGE>
5.2 CONSENTS AND APPROVALS. All authorizations, consents and approvals
(contractual or otherwise) of any state, federal, local or foreign government
agency, regulatory body or official or any person (other than the California
Company or the Delaware Company) necessary for the valid consummation of the
Merger in accordance with this Agreement shall have been obtained and shall be
in full force and effect.
ARTICLE 6
MISCELLANEOUS
6.1 WAIVER AND AMENDMENT. This Agreement may be amended by action of
the respective Boards of Directors of the California Company and the Delaware
Company without action by the respective shareholders and stockholder of the
parties, except that (i) any amendments to Section 3.1 above, (ii) any amendment
changing the terms, rights, powers or preferences of Delaware Common Stock or
(iii) any amendment altering any terms of this Agreement if such alteration
would adversely affect the holders of any class or series of the capital stock
of the California Company or the Delaware Company must be approved by the
holders of a majority of the California Common Stock.
6.2 TERMINATION. This Agreement may be terminated and the Merger and
other transactions provided for by this Agreement abandoned at any time prior to
the Effective Time, whether before or after adoption and approval of this
Agreement by the shareholders of the California Company, by action of the Board
of Directors of the California Company if the Board determines that the
consummation of the transactions contemplated by this Agreement would not, for
any reason, be in the best interests of the California Company and its
shareholders.
6.3 ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to the Merger and supersedes all prior and
concurrent arrangements, letters of intent or understandings relating to the
Merger.
6.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which when taken
together shall constitute one and the same agreement. This Agreement shall
become effective when one or more counterparts have been signed by each of the
parties and delivered to each of the parties.
6.5 HEADINGS. The article, section and paragraph headings in this
Agreement are intended principally for convenience and shall not, by themselves,
determine rights and obligations of the parties to this Agreement.
6.6 NO WAIVER. No waiver by any party of any condition, or the breach
of any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or breach of any other term or covenant contained in this Agreement.
-6-
<PAGE>
6.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, and so far as applicable, the
merger provisions of the California Corporations Code.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
WD-40 COMPANY,
a California corporation
By:
---------------------------
Its:
----------------------
By:
---------------------------
Its:
----------------------
WD-40 COMPANY,
a Delaware corporation
By:
---------------------------
Its:
----------------------
By:
---------------------------
Its:
----------------------
-7-
<PAGE>
APPENDIX B
CERTIFICATE OF INCORPORATION
OF
WD-40 COMPANY
ARTICLE I
The name of the corporation (the "Corporation") is:
WD-40 COMPANY
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
The Corporation is authorized to issue only one class of stock, to
be designated "Common Stock." The total number of shares of Common Stock
which the Corporation is authorized to issue is Thirty-Six Million
(36,000,000), with a par value of $0.001 per share.
ARTICLE V
In addition to the requirements of applicable law and the other
provisions of this Certificate of Incorporation:
1. The affirmative vote or consent of eighty-five percent (85%) of
the outstanding shares of Voting Stock (defined below) of the Corporation
shall be required for the adoption or authorization of a Business Combination
(defined below) unless:
(a) The Board of Directors of the Corporation shall have
approved the proposed Business Combination prior to the date a
Controlling Person (defined below) who proposes to enter into or be a
party to or be involved in the Business Combination first became a
Controlling Person; or
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(b) (i) The Business Combination will result in an involuntary
sale, redemption, cancellation or other termination of ownership of all
shares of Voting Stock of the Corporation owned by stockholders who do
not vote in favor of, or consent in writing to, the Business
Combination and the cash or fair value of other readily marketable
consideration to be received by such stockholders for such shares shall
at least be equal to the Minimum Price Per Share (defined below); and
(ii) A proxy statement responsive to the requirements of the
Securities Exchange Act of 1934 (defined below) will be mailed to the
stockholders of the Corporation for the purposes of soliciting
stockholder approval of the proposed Business Combination. Such proxy
statement shall allow individual Directors to express their opinion as
to the relative merits of the proposed Business Combination in a
prominent place therein; and
(iii) After the Controlling Person who proposes to enter into
or be a party to or be involved in the Business Combination has become
a Controlling Person and prior to the consummation of the proposed
Business Combination:
(1) except as approved by a unanimous vote of the
Directors, there shall have been no failure to declare and pay
at the regular date therefor any full quarterly dividends
(whether or not cumulative) on any outstanding preferred stock;
(2) there shall have been (A) no reduction in the
annual rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common Stock),
except as approved by a unanimous vote of the Directors, and
(B) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any
reverse stock split), recapitalization, reorganization, or
any similar transaction which has the effect of reducing the
number of outstanding shares of the Common Stock, unless the
failure so to increase such annual rate is approved by a
unanimous vote of the Directors; and
(3) such Controlling Person shall have not become the
Beneficial Owner (defined below) of any additional shares of
Voting Stock except as part of the transaction which results
in such Controlling Person becoming a Controlling Person; and
(iv) After such Controlling Person has become a Controlling
Person, such Controlling Person shall not have received the benefit,
directly or indirectly (except proportionately, solely in such
Controlling Person's capacity as a stockholder of the Corporation), of
any loans, advances, guarantees, pledges, or other financial assistance
or any tax credits or other tax advantage provided by the Corporation,
whether in anticipation of or in connection with the proposed Business
Combination or otherwise.
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2. For purposes of this Article V, the following definitions shall
apply:
(a) An "Affiliate" of the specified Person (defined below) shall
mean a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with the Person specified.
(b) An "Associate" of a specified Person shall mean (1) any
corporation or organization of which such Person is an officer or
partner or is, directly or indirectly the Beneficial Owner of five
percent (5%) or more of any class of equity securities, (2) any trust
or other estate in which such Person has a five percent (5%) or larger
beneficial interest of any nature or as to which such Person serves as
trustee or in a similar fiduciary capacity, (3) any spouse of such
Person, and (4) any relative of such Person, or any relative of a
spouse of such Person, who has the same residence as such Person or
spouse.
(c) "Beneficial Ownership" of shares of Voting Stock shall
include without limitation (i) all shares directly or indirectly owned
by a Person, by an Affiliate of such Person or by an Associate of such
Person or such Affiliate, (ii) all shares which such Person, Affiliate,
or Associate has the right to acquire through the exercise of any
option, warrant or right (whether or not currently exercisable),
through the conversion of a security, pursuant to the power to revoke a
trust, discretionary account or similar arrangement, or pursuant to the
automatic termination of a trust, discretionary account or similar
arrangement, and (iii) all shares which are beneficially owned,
directly or indirectly, by any other Person with whom such
first-mentioned Person, Affiliate, or Associate has, directly or
indirectly, any contract, arrangement, understanding, relationship or
otherwise (including without limitation any written or unwritten
agreement to act in concert but specifically excluding any
participation agreement, arrangement, understanding or relationship
between or among any two or more commercial banks made or established
in connection with and in furtherance of a bona fide lending
arrangement with the Corporation and/or one or more Subsidiaries
(defined below)) with respect to exercise of the voting power (which
includes the power to vote or to direct the voting of such shares) or
investment power (which includes the power to dispose or to direct the
disposition of such shares, or both) incident to ownership of such
shares.
(d) "Business Combination" shall mean (1) any merger or
consolidation of the Corporation with or into a Controlling Person or
Affiliate of a Controlling Person or Associate of such Controlling
Person or Affiliate, (2) any sale, lease, exchange, transfer or other
disposition, including without limitation a mortgage or any other
security device, in a single transaction or series of related
transactions, of all or any Substantial Part (defined below) of the
assets of the Corporation, including without limitation any voting
securities of a Subsidiary, or of a Subsidiary, to a Controlling Person
or Affiliate of a Controlling Person or Associate of such Controlling
Person or Affiliate, (3) any merger into the Corporation, or into a
Subsidiary, of a Controlling Person or an Affiliate of a Controlling
Person or an Associate of such Controlling Person or Affiliate, (4) any
sale, lease, exchange, transfer or other disposition to the Corporation
or a Subsidiary of all or any part of the assets of a Controlling
Person or Affiliate of a Controlling Person or Associate of such
Controlling Person or Affiliate, but not including any dispositions of
assets which, if included with all other dispositions consummated
during the same fiscal year of the Corporation by the same Controlling
Person, Affiliates thereof and Associates of such Controlling Person or
Affiliates, would not result in dispositions during such year by all
such Persons of assets
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having an aggregate fair value (determined at the time of
disposition of the respective assets) in excess of one percent (1%)
of the total consolidated assets of the Corporation (as shown on its
certified balance sheet as of the end of the fiscal year preceding
the proposed disposition), provided, however, that in no event shall
any disposition of assets be excepted from stockholder approval by
reason of the preceding exclusion if such disposition when included
with all other dispositions consummated during the same, and
immediately preceding nine, fiscal years of the Corporation by the
same Controlling Person, Affiliates thereof and Associates of such
Controlling Person or Affiliates, would result in dispositions by
all such Persons of assets having an aggregate fair value
(determined at the time of disposition of the respective assets) in
excess of five percent (5%) of the total consolidated assets of the
Corporation (as shown on its certified balance sheet as of the end
of the fiscal year preceding the proposed disposition), (5) any
reclassification of Common Stock of the Corporation, or any
recapitalization involving Common Stock of the Corporation,
consummated within ten years after the Controlling Person who
proposes such reclassification or recapitalization becomes a
Controlling Person, and (6) any agreement, contract or other
arrangement providing for any of the transactions described in this
definition of Business Combination, but, notwithstanding anything to
the contrary herein, Business Combination shall not include any
transaction involving a Controlling Person or Affiliate of a
Controlling Person or Associate of such Controlling Person or
Affiliate which is to be consummated or become effective after such
Controlling Person has been a Controlling Person for at least ten
years. A Person who is or was a Controlling Person as of (i) the
time any definitive agreement relating to a Business Combination is
entered into, (ii) the record date for the determination of
stockholders entitled to notice of and to vote on a Business
Combination, or (iii) immediately prior to the consummation of a
Business Combination shall be deemed to be a Controlling Person for
purposes of this definition.
(e) "Control" of a Person shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership
of voting securities, by contract or otherwise.
(f) "Controlling Person" shall mean any Person who
Beneficially Owns a number of shares of Voting Stock of the
Corporation, whether or not such number includes shares not then
outstanding or entitled to vote, which exceeds a number equal to ten
percent (10%) of the outstanding shares of Voting Stock of the
Corporation, but does not include any one or a group of more than one
of the members of the Board of Directors of the Corporation who (i)
were members of the Board of Directors on the date this Article V
became effective, (ii) are members of the Board of Directors promptly
following the merger of WD-40 Company, a California corporation, with
and into the Corporation, or (iii) were first elected as Directors
prior to the date a Controlling Person who proposes to enter into or be
a party to or be involved in a Business Combination became a
Controlling Person.
(g) "Minimum Price Per Share" shall mean the sum of (a) the
higher of (i) the highest gross per share price paid or agreed to be
paid to acquire any shares of Voting Stock of the Corporation
Beneficially Owned by a Controlling Person, provided such payment or
agreement to make payment was made within ten years immediately prior
to the record date set to determine the stockholders entitled to vote
or consent to the Business Combination in question, or (ii) the highest
per share closing public market price for such Voting Stock during such
ten-year period, plus (b) the aggregate amount, if any, by which ten
percent
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(10%) for each year, beginning on the date on which such Controlling
Person became a Controlling Person, of such higher per share price
exceeds the aggregate amount of all Common Stock dividends per share
paid in cash since the date on which such Person became a Controlling
Person. The calculation of the Minimum Price Per Share shall require
appropriate adjustments for capital changes, including without
limitation stock splits, stock dividends and reverse stock splits.
(h) "Person" shall mean an individual, a corporation, a
partnership, an association, a limited liability company, a joint-stock
company, a trust, any unincorporated organization, a government or
political subdivision thereof and any other entity (other than the
Corporation, its Subsidiaries or a trustee holding stock for the
benefit of employees of the Corporation or its Subsidiaries, or any one
of them, pursuant to one or more employee benefit plans or
arrangements).
(i) "Securities Exchange Act of 1934" shall mean the Securities
Exchange Act of 1934, as amended from time to time, as well as any
successor or replacement statute.
(j) "Subsidiary" shall mean any corporation more than twenty-five
percent (25%) of whose outstanding securities representing the right to
vote for the election of Directors is Beneficially Owned by the
Corporation and/or one or more Subsidiaries.
(k) "Substantial Part" shall mean more than ten percent (10%)
of the total assets of the corporation in question, as shown on its
certified balance sheet as of the end of the most recent fiscal year
ending prior to the time the determination is being made.
(l) "Voting Stock" of the Corporation shall mean all outstanding
shares of Capital Stock of the Corporation entitled to vote generally
in the election of Directors, and each reference to a proportion of
shares of Voting Stock shall refer to such proportion of the votes
entitled to be cast by such shares.
3. This Article V shall not be altered, changed or repealed unless
the amendment effecting such alteration, change or repeal shall have received
the affirmative vote or consent of eighty-five percent (85%) of the
outstanding shares of Common Stock of the Corporation; PROVIDED, HOWEVER,
that this Paragraph 3 shall not apply to, and such vote shall not be required
for, any such alteration, change or repeal recommended to stockholders by a
unanimous vote of the Directors and any such alteration, change or repeal so
recommended shall require only the vote, if any, required under the
applicable provisions of the General Corporation Law of the State of Delaware
(as amended from time to time).
4. A Controlling Person shall be subject to all fiduciary and other
standards of conduct and obligations imposed by law.
5. The provisions of this Article V are severable: if any provision
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall continue in full force without
being impaired or invalidated in any way.
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ARTICLE VI
The number of Directors which constitute the whole Board of
Directors of the Corporation shall be as specified in the Bylaws of the
Corporation.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, amend,
rescind or repeal the Bylaws of the Corporation.
ARTICLE VIII
Elections need not be by ballot unless otherwise specified in the
Bylaws of the Corporation; PROVIDED, HOWEVER, that all elections for
Directors must be by ballot upon any demand made by a stockholder at the
meeting and before the voting begins.
ARTICLE IX
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws of the Corporation may provide. The books of the
Corporation may be kept (subject to any provision contained in the General
Corporation Law of the State of Delaware) outside the State of Delaware at
such place or places as may be designated from time to time by the Board of
Directors or in the Bylaws of the Corporation.
ARTICLE X
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE XI
1. A Director's liability to the Corporation for breach of any duty
to the Corporation or its stockholders shall be limited to the fullest extent
permissible by the laws of the State of Delaware as now in effect or
hereafter amended. In particular, no Director shall be liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a Director, except for liability (a) for any breach of the
Director's duty of loyalty to the Corporation or its stockholders, (b) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (c) under Section 174 of the General
Corporation Law of the State of Delaware, as the same exists or hereafter may
be amended, or (d) for any transaction from which the Director derived an
improper personal benefit.
2. Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director existing at the time
of such repeal or modification.
3. If the General Corporation Law of the State of Delaware is
amended to authorize corporate action further eliminating or limiting the
liability of directors, then a Director, in addition to the circumstances in
which he or she is not now liable, shall be free of liability to the fullest
extent permitted by the General Corporation Law of the State of Delaware, as
so amended.
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ARTICLE XII
1. The Corporation shall be authorized to indemnify its officers,
Directors, employees and agents to the fullest extent permitted by the
General Corporation Law of the State of Delaware, which power to indemnify
shall include, without limitation, the power to enter into indemnification
agreements and amendments thereto upon such terms as the Board of Directors
shall deem advisable.
2. Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of any officer, Director, employee
or agent of the Corporation existing at the time of, or increase the
liability of any Director with respect to any acts or omissions of any
officer, Director, employee or agent of the Corporation occurring prior to,
such repeal or modification.
ARTICLE XIII
The name and mailing address of the incorporator of the Corporation is:
Thomas J. Tranchina
WD-40 COMPANY
1061 Cudahy Place
San Diego, CA 92110
THE UNDERSIGNED incorporator, for the purpose of forming a
corporation pursuant to the General Corporation Law of the State of Delaware,
hereby acknowledges that the foregoing Certificate of Incorporation is his
act and deed and that the facts stated therein are true.
Dated:____________ __, 1999 ______________________________
Thomas J. Tranchina
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APPENDIX C
BYLAWS
OF
WD-40 COMPANY
(a Delaware corporation)
ARTICLE I - OFFICES
Section 1. REGISTERED OFFICE. The initial registered office of
WD-40 Company, a Delaware corporation (the "Corporation"), in Delaware shall
be The Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle, 19801.
Section 2. PRINCIPAL EXECUTIVE OFFICE. The initial principal
executive office of the Corporation is hereby fixed and located at 1061
Cudahy Place, San Diego, California 92110. The Board of Directors (the
"Board") is hereby granted full power and authority to change said principal
executive office from one location to another. Any such change shall be noted
on the Bylaws opposite this Section, or this Section may be amended to state
the new location.
Section 3. OTHER OFFICES. Branch or subordinate offices of the
Corporation may at any time be established by the Board at any place or
places.
ARTICLE II - STOCKHOLDERS
Section 1. PLACE OF MEETING. Meetings of stockholders shall be
held either at the principal executive office of the Corporation or at any
other place within or without the State of Delaware which may be designated
either by the Board or by the written consent of all persons entitled to vote
thereat, given either before or after the meeting and filed with the
Secretary.
Section 2. ANNUAL MEETINGS. The annual meeting of stockholders
shall be held on that Tuesday falling the closest to December 15 of each year
at 2 o'clock P.M., local time, or such other date or such other time as may
be fixed by the Board; PROVIDED, HOWEVER, that should said day fall upon a
legal holiday observed by the Corporation at its principal executive office,
then any such annual meeting of stockholders shall be held at the same time
and place on the next day ensuing which is a full business day. At such
meetings, Directors shall be elected and any other proper business may be
transacted.
Section 3. NOTICE OF ANNUAL OR SPECIAL MEETING. Written notice of
each annual or special meeting of stockholders shall be given not less than
10 nor more than 60 days
<PAGE>
before the date of the meeting to each stockholder entitled to vote thereat.
Such notice shall state the place, date, and hour of the meeting and (i) in
the case of a special meeting the general nature of the business to be
transacted, and no other business may be transacted, or (ii) in the case of
the annual meeting, those matters which the Board, at the time of the mailing
of the notice, intends to present for action by the stockholders, but,
subject to the provisions of applicable law, any proper matter may be
presented at the meeting for such action. The notice of any meeting at which
Directors are to be elected shall include the names of nominees intended at
the time of the notice to be presented by the Board for election. Notice of a
stockholders' meeting shall be given either personally or by mail, including
third class mail, or by other means of written communication, addressed to
the stockholder at the address of such stockholder appearing on the books of
the Corporation or given by the stockholder to the Corporation for the
purpose of notice; or, if no such address appears or is given, at the place
where the principal executive office of the Corporation is located or by
publication at least once in a newspaper of general circulation in the county
in which the principal executive office is located. The notice shall be
deemed to have been given at the time when delivered personally or deposited
in the mail or sent by other means of written communication.
Section 4. QUORUM. The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders, except as otherwise provided by statute or by the Corporation's
Certificate of Incorporation (the "Certificate of Incorporation"). When a
quorum is present at any meeting, the vote of the holders of a majority of
the stock having voting power present in person or represented by proxy shall
decide any question brought before such meeting, unless the question is one
upon which, by express provision of any applicable statute or of the
Certificate of Incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 5. ADJOURNED MEETING AND NOTICE THEREOF. Any
stockholders' meeting, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of
which are either present, in person or represented by proxy thereat, but in
the absence of a quorum (except as provided in Section 4 of this Article) no
other business may be transacted at such meeting. It shall not be necessary
to give any notice of the time and place of the adjourned meeting or of the
business to be transacted thereat, other than by announcement at the meeting
at which such adjournment is taken; PROVIDED, HOWEVER, that when any
stockholders' meeting is adjourned for more than 30 days or, if after
adjournment a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting shall be given as in the case of an original meeting.
Section 6. VOTING. The stockholders entitled to notice of any
meeting or to vote at any such meeting shall be only persons in whose name
shares stand on the stock records of the Corporation on the record date
determined in accordance with Section 7 of this Article. Voting shall in all
cases be subject to the provisions of the Delaware General Corporation Law
and to the following provisions:
(a) Subject to clause (g) below, shares held by an
administrator, executor, guardian, conservator or custodian may be voted by
such holder either in person or by proxy, without a transfer of such shares
into the holder's name; and shares standing in the name of a trustee may be
voted by the trustee, either in person or by proxy, but no trustee shall be
entitled to vote shares held by such trustee without a transfer of such
shares into the trustee's name.
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(b) Shares standing in the name of a receiver may be voted
by such receiver; and shares held by or under the control of a receiver may
be voted by such receiver without the transfer thereof into the receiver's
name if authority to do so is contained in the order of the court by which
such receiver was appointed.
(c) Subject to the provisions of Section 217 of the
Delaware General Corporation Law, and except where otherwise agreed in
writing between the parties, a stockholder whose shares are pledged shall be
entitled to vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
(d) Shares standing in the name of a minor may be voted
and the Corporation may treat all rights incident thereto as exercisable by
the minor, in person or by proxy, whether or not the Corporation has notice,
actual or constructive, of the nonage, unless a guardian of the minor's
property has been appointed and written notice of such appointment given to
the Corporation.
(e) Shares standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent or proxyholder as
the bylaws of such other corporation may prescribe or, in the absence of such
provision, as the board of directors of such other corporation may determine
or, in the absence of such determination, by the chairman of the board of
directors, president or any vice president of such other corporation, or by
any other person authorized to do so by the board of directors, president or
any vice president of such other corporation. Shares which are purported to
be voted or any proxy purported to be executed in the name of a corporation
(whether or not any title of the person signing is indicated) shall be
presumed to be voted or the proxy executed in accordance with the provisions
of this subdivision, unless the contrary is shown.
(f) Shares of the Corporation owned by any subsidiary
shall not be entitled to vote on any matter.
(g) Shares held by the Corporation in a fiduciary capacity,
and shares of the Corporation held in a fiduciary capacity by any subsidiary,
shall not be entitled to vote on any matter, except to the extent that the
settlor or beneficial owner possesses and exercises a right to vote or to
give the Corporation binding instructions as to how to vote such shares.
(h) If shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a stockholder
voting agreement or otherwise, or if two or more persons (including
proxyholders) have the same fiduciary relationship respecting the same
shares, unless the Secretary of the Corporation is given written notice to
the contrary and is furnished with a copy of the instrument or order
appointing them or creating the relationship wherein it is so provided, their
acts with respect to voting shall have the following effect:
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the majority so
voting;
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(iii) If more than one vote, but the vote is evenly
split on any particular matter, each faction may
vote the securities in question proportionately.
If the instrument so filed or the registration of the shares shows that any such
tenancy is held in unequal interests, a majority or even split for the purpose
of this section shall be a majority or even split in interest.
Section 7. RECORD DATE. The Board may fix, in advance, a record
date for the determination of the stockholders entitled to notice of any
meeting or to vote or entitled to receive payment of any dividend or other
distribution, or any allotment of rights, or to exercise rights in respect to
any other lawful action. The record date so fixed shall be not more than 60
nor less than 10 days prior to the date of the meeting nor more than 60 days
prior to any other action. When a record date is so fixed, only stockholders
of record on that date are entitled to notice of and to vote at the meeting
or to receive the dividend, distribution, or allotment of rights, or to
exercise of the rights, as the case may be, notwithstanding any transfer of
shares on the books of the Corporation after the record date. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting unless the Board
fixes a new record date for the adjourned meeting. The Board shall fix a new
record date if the meeting is adjourned for more than 30 days.
If no record date is fixed by the Board, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived at the close
of business on the business day next preceding the day on which the meeting is
held. The record date for determining stockholders for any purpose other than
set forth in this Section 7 or Section 9 of this Article shall be at the close
of business on the day on which the Board adopts the resolution relating
thereto, or the 60th day prior to the date of such other action, whichever is
later.
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting
of stockholders, however called and noticed, and wherever held, are as valid
as though had at a meeting duly held after regular call and notice, if a
quorum is present either in person or by proxy, and if, either before or
after the meeting, each of the persons entitled to vote, not present in
person or by proxy, signs a written waiver of notice or a consent to the
holding of the meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section 9. ACTION WITHOUT MEETING. Unless otherwise restricted by
the Certificate of Incorporation, any action which may be taken at any annual
or special meeting of stockholders may be taken without a meeting and without
prior notice if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Every written consent shall
bear the date of signature of each stockholder who signs the consent and no
written consent shall be effective to take the corporate action referred to
therein unless, within sixty (60) days of the earliest dated consent
delivered to the Corporation in the manner required by the Delaware General
Corporation Law,
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<PAGE>
written consents signed by a sufficient number of stockholders to take such
action are delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested.
Section 10. PROXIES. Unless otherwise provided in the Certificate of
Incorporation, each stockholder shall, at every meeting of the stockholders, be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, except that no proxy shall be
voted on after 11 months from its date, unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally.
Section 11. INSPECTORS OF ELECTION. The Corporation shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act
at the meeting and make a written report thereof. The Corporation may
designate one or more persons as alternate inspectors to replace any
inspector who fails to act. If no inspector or alternate is able to act at a
meeting of stockholders, the person presiding at the meeting shall appoint
one or more inspectors to act at the meeting. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspector(s) shall: (1) ascertain the number
of shares outstanding and the voting power of each; (2) determine the shares
represented at a meeting and the validity of the proxies or ballots; (3)
count all votes and ballots; (4) determine and retain for a reasonable period
a record of the disposition of any challenges made to any determination by
the inspectors; and (5) certify the determination of the number of shares
represented at the meeting, and the count of all votes and ballots. The
inspector(s) may appoint or retain other persons or entities to assist the
inspector(s) in the performance of the duties of the inspector(s).
Section 12. STOCKHOLDER LISTS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the
name of each stockholder. Such list will be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list also shall be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
ARTICLE III - DIRECTORS
Section 1. POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of the Board, which may exercise
all such powers of the Corporation and do
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all such lawful acts and things as are not by statute or by the Certificate
of Incorporation or by these Bylaws directed or required to be exercised or
to be done by the stockholders.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. Unless
otherwise specified in the Certificate of Incorporation, the authorized
number of Directors shall be not less than nine (9) nor more than twelve (12)
until changed by an amendment of this Section 2 duly adopted by the
stockholders. The exact number of Directors shall be fixed, within the limits
specified in the immediately preceding sentence, by a resolution adopted by
the Board or by the stockholders. The exact number of Directors shall
initially be ten (10) until changed as provided in this Section 2.
Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be
elected at each annual meeting of stockholders, but if any such annual
meeting is not held or the Directors are not elected thereat, the Directors
may be elected at any special meeting of stockholders held for that purpose.
Each Director shall hold office until the next annual meeting and until a
successor has been elected and qualified.
Section 4. VACANCIES. Any Director may resign effective upon
giving written notice to the Chairman of the Board, the President, Secretary
or the Board, unless the notice specifies a later time for the effectiveness
of such resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes
effective. Vacancies in the Board, including those existing as a result of a
removal of a Director, may be filled by approval of the Board or, if the
number of Directors then in office is less than a quorum, by (1) the
unanimous written consent of the Directors then in office, (2) the
affirmative vote of a majority of the Directors then in office at a meeting
held pursuant to notice or waivers of notice as required for special
meetings, or (3) by a sole remaining Director. Except as provided herein,
each Director so elected shall hold office until the next annual meeting and
until such Director's successor has been elected and qualified. If, at the
time of filling any vacancy or any newly created directorship, the Directors
then in office shall constitute less than a majority of the whole Board (as
constituted immediately prior to any such increase), the Court of Chancery
may, upon application of any stockholder or stockholders holding at least 10%
of the total number of the shares at the time outstanding and having the
right to vote for such Directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to replace the
Directors chosen by the Directors then in office as aforesaid. A vacancy or
vacancies in the Board shall be deemed to exist in case of the death,
resignation or removal of any Director, or if the authorized number of
Directors be increased, or if the stockholders fail, at any annual or special
meeting of stockholders at which any Director or Directors are elected, to
elect the full authorized number of Directors to be voted for at that
meeting. The Board may declare vacant the office of a Director who has been
declared of unsound mind by an order of court or convicted of a felony. The
stockholders may elect a Director or Directors at any time to fill any
vacancy or vacancies not filled by the Directors. Any such election by
written consent requires the consent of a majority of the outstanding shares
entitled to vote. If the Board accepts the resignation of a Director tendered
to take effect at a future time, the Board or the stockholders shall have
power to elect a successor to take office when the resignation is to become
effective.
Section 5. PLACE OF MEETING. Regular or special meetings of the
Board shall be held at any place within or without the State of Delaware
which has been designated from time to time by the Board. In the absence of
such designation regular meetings shall be held at the principal executive
office of the Corporation.
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Section 6. REGULAR MEETINGS. Immediately following each annual
meeting of stockholders, the Board shall hold a regular meeting for the
purpose of organization, election of officers, and the transaction of other
business. Other regular meetings of the Board shall be held without notice at
such date, time and place as may be fixed by the Board in advance thereof
following the end of each of the second, third and fourth quarters of the
Corporation's fiscal year. If the Board fails to fix the date, time and place
of any such regular meeting, the Chairman of the Board, the President or the
Secretary shall do so and the meeting shall be called and noticed as for
special meetings.
Section 7. SPECIAL MEETINGS. Special meetings of the Board for
any purpose or purposes may be called at any time by the Chairman of the
Board, the President or the Secretary or by any two Directors. Special
meetings of the Board shall be held upon four days' written notice or 48
hours' notice given personally or by telephone, including a voice messaging
system or other system or technology designed to record and communicate
messages, telegraph, facsimile, electronic mail or other electronic means.
Any such notice shall be addressed or delivered to each Director at such
Director's address or by such means as it is shown upon the records of the
Corporation or as may have been given to the Corporation by the Director for
purposes of notice or, if such address is not shown on such records or is not
readily ascertainable, at the place in which the meetings of the Directors
are regularly held.
Section 8. QUORUM. A majority of the authorized number of
Directors constitutes a quorum of the Board for the transaction of business,
except to adjourn as hereinafter provided. Every act or decision done or made
by a majority of the Directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the Board, unless a greater
number be required by law or by the Certificate of Incorporation. If a quorum
shall not be present at any meeting of the Board, the Directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Members of the Board may participate in a meeting through use of conference
telephone or similar communications equipment, so long as all members in such
meeting can hear one another.
Section 10. WAIVER OF NOTICE. The transactions of any meeting of
the Board, however called and noticed or wherever held, are as valid as
though had at a meeting duly held after regular call and notice if a quorum
be present and if either before or after the meeting, each of the Directors
not present signs a written waiver of notice, a consent to holding such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 11. ADJOURNMENT. A majority of the Directors present,
whether or not a quorum is present, may adjourn any Directors' meeting to
another time and place. Notice of the time and place of holding an adjourned
meeting need not be given to absent Directors if the time and place be fixed
at the meeting adjourned. If the meeting is adjourned for more than 24 hours,
notice of any adjournment to another time or place shall be given prior to
the time of the adjourned meeting to the Directors who were not present at
the time of the adjournment.
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Section 12. FEES AND COMPENSATION. Directors and members of
committees may receive such compensation, if any, for their services, and
such reimbursement for expenses, as may be fixed or determined by the Board.
No such payment shall preclude any Director from serving the Corporation in
any other capacity and receiving compensation therefor. Members of committees
designated by the Board may be allowed like compensation for their services
to the Corporation.
Section 13. ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the Board may be taken without a meeting if all
members of the Board shall individually or collectively consent in writing to
such action. Such consent or consents shall have the same effect as a
unanimous vote of the Board and shall be filed with the minutes of the
proceedings of the Board.
Section 14. RIGHTS OF INSPECTION. Every Director shall have the
absolute right at any reasonable time to inspect and copy all books, records
and documents of every kind and to inspect the physical properties of the
Corporation and also of its subsidiary corporations, domestic or foreign.
Such inspection by a Director may be made in person or by agent or attorney
and includes the right to copy and obtain extracts.
Section 15. COMMITTEES. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of one or more of the Directors, which to the extent provided in
the resolution of the Board, or in these Bylaws, shall have and may exercise
all the powers and authority of the Board in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation
to be affixed to all papers which may require it, except as limited by
Delaware General Corporation Law. Each committee of the Board may fix its own
rules of procedure and shall hold its meetings as provided by such rules,
except as may otherwise be provided by the resolution of the Board
designating such committee, but in all cases the presence of at least a
majority of the members of such committee shall be necessary to constitute a
quorum. In the event that a member of such committee is absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the Board to act at the meeting in
place of any such absent or disqualified member. Each committee shall keep
regular minutes of its meetings and report the same to the Board when
required.
ARTICLE IV - OFFICERS
Section 1. OFFICERS. The officers of the Corporation shall be a
president, secretary, and a treasurer. The Corporation may also have, at the
discretion of the Board, a chairman of the Board, one or more vice
presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be elected or appointed in
accordance with the provisions of Section 3 of this Article.
Section 2. ELECTION. The officers of the Corporation, except such
officers as may be elected or appointed in accordance with the provisions of
Section 3 or Section 5 of this Article, shall be chosen annually by, and
shall serve at the pleasure of, the Board, and shall hold their respective
offices until their resignation, removal or other disqualification from
service, or until their respective successors shall be elected.
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Section 3. SUBORDINATE OFFICERS. The Board may elect, and may empower
the President to appoint, such other officers as the business of the Corporation
may require, each of whom shall hold office for such period, have such authority
and perform such duties as are provided in these Bylaws or as the Board may from
time to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by the Board at any time, or, except in the case of an
officer chosen by the Board, by any officer upon whom such power of removal may
be conferred by the Board. Any such removal shall be without prejudice to the
rights, if any, of the officer under any contract of employment of the officer.
Any officer may resign at any time by giving written notice to the Corporation,
but without prejudice to the rights, if any, of the Corporation under any
contract to which the officer is a party. Any such resignation shall take effect
at the date of the receipt of such notice or at any later time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled in
the manner prescribed in these Bylaws for regular election or appointment to
such office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there
shall be such an officer, shall, if present, preside at all meetings of the
Board and exercise and perform such other powers and duties as may be from time
to time assigned by the Board.
Section 7. PRESIDENT. Subject to such powers, if any, as may be given
by the Board to the Chairman of the Board, if there be such an officer, the
President is the general manager and chief executive officer of the Corporation
and has, subject to the control of the Board, general supervision, direction,
and control of the business and officers of the Corporation. The President shall
preside at all meetings of the stockholders and, in the absence of the Chairman
of the Board, or if there be none, at all meetings of the Board. The President
has the general powers and duties of management usually vested in the office of
president and general manager of a corporation and such other powers and duties
as may be prescribed by the Board.
Section 8. VICE PRESIDENT. In the absence or disability of the
President, the Vice President (in order of their rank as fixed by the Board, or
if not ranked, the Vice President designated by the Board) shall perform all the
duties of the President, and when so acting shall have all the powers of and be
subject to all the restrictions upon the President. The Vice Presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept, at
the principal executive office and such other place as the Board may order, a
book of minutes of all meetings of stockholders, the Board and its committees,
with the time and place of holding, whether regular or special, and, if special,
how authorized, the notice thereof given, the names of those present at Board
and committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof. The Secretary shall keep,
or cause to be kept, a copy of the Bylaws of the Corporation at the principal
executive office or business office in accordance with Section 213 of the
Delaware General Corporation Law. The Secretary shall keep, or cause to be kept,
at the principal executive office or at the office of the Corporation's transfer
agent or registrar, if one be appointed, a
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share register, or a duplicate share register, showing the names of the
stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings of
the stockholders and of the Board and of any committees thereof required by
these Bylaws or by law to be given, shall keep the seal of the Corporation in
safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the Board.
Section 10. TREASURER. The Treasurer is the chief financial officer of
the Corporation and shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
Corporation, and shall send or cause to be sent to the stockholders of the
Corporation such financial statements and reports as are by law or these Bylaws
required to be sent to them. The books of account shall at all times be open to
inspection by any Director. The Treasurer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board. The Treasurer shall disburse the
funds of the Corporation as may be ordered by the Board, shall render to the
President and Directors, whenever they request it, an account of all
transactions as Treasurer and of the financial condition of the Corporation, and
shall have such other powers and perform such other duties as may be prescribed
by the Board.
ARTICLE V - OTHER PROVISIONS
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Section 1. INSPECTION OF BYLAWS. The Corporation shall keep in its
principal executive office the original or a copy of these Bylaws as amended to
date which shall be open to inspection by stockholders at all reasonable times
during office hours. If the principal executive office of the Corporation is
outside the State of Delaware and the Corporation has no principal business
office in such state, it shall upon the written notice of any stockholder
furnish to such stockholder a copy of these Bylaws as amended to date.
Section 2. ENDORSEMENT OF DOCUMENTS; CONTRACTS. Subject to the
provisions of applicable law, any note, mortgage, evidence of indebtedness,
contract, share certificate, conveyance, or other instrument in writing and any
assignment or endorsements thereof executed or entered into between this
Corporation and any other person, when signed by the Chairman of the Board, the
President, or any Vice President, and the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of this Corporation shall be valid and
binding on this Corporation in the absence of actual knowledge on the part of
the other person that the signing officers had not authority to execute the
same. Any such instruments may be signed by any other person or persons and in
such manner as from time to time shall be determined by the Board, and, unless
so authorized by the Board, no officer, agent or employee shall have any power
or authority to bind the Corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or amount.
Section 3. CERTIFICATES OF STOCK. Every holder of shares of the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation by the Chairman of the Board, the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, certifying the number of shares and the class or series of shares
owned by the stockholder. Any or all of the signatures on the certificate may be
facsimile. If any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officers, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if such person were an
officer, transfer agent or registrar at the date of issue. Certificates for
shares may be issued prior to full payment under such restrictions and for such
purposes as the Board may provide; PROVIDED, HOWEVER, that on any certificate
issued to represent any partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Except as provided in this Section no new certificate for shares shall be issued
in lieu of an old one unless the latter is surrendered and canceled at the same
time. The Board may, however, in case any certificate for shares is alleged to
have been lost, stolen or destroyed, authorize the issuance of a new certificate
in lieu thereof, and the Corporation may require that the Corporation be given a
bond or other adequate security sufficient to indemnify it against any claim
that may be made against it (including expense or liability) on account of the
alleged loss, theft or destruction of such certificate or the issuance of such
new certificate.
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Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
President or any other officer or officers authorized by the Board or the
President are authorized to vote, represent and exercise on behalf of the
Corporation the rights incident to any and all shares of any other corporation
or corporations standing in the name of the Corporation. The authority herein
granted may be exercised either by any such officer in person or by any other
person authorized so to do by proxy or power of attorney duly executed by said
officer.
Section 5. STOCK PURCHASE PLANS. The Corporation may adopt and carry
out a stock purchase plan or agreement or stock option plan or agreement
providing for the issue and sale for such consideration as may be fixed of its
unissued shares, or of issued shares acquired or to be acquired, to one or more
of the employees or Directors of the Corporation or of a subsidiary or to a
trustee on their behalf and for the payment of such shares in installments or at
one time, and may provide for aiding any such persons in paying for such shares
by compensation for services rendered, promissory notes or otherwise. Any such
stock purchase plan or agreement or stock option plan or agreement may include,
among other features, the fixing of eligibility for participation therein, the
class and price of shares to be issued or sold under the plan or agreement, the
number of shares which may be subscribed for, the method of payment therefor,
the reservation of title until full payment therefor, the effect of the
termination of employment, an option or obligation on the part of the
Corporation to repurchase the shares upon termination of employment,
restrictions upon transfer of the shares, the time limits of and termination of
the plan and any other matters, not in violation of applicable law, as may be
included in the plan as approved or authorized by the Board of any committee of
the Board.
Section 6. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise
requires, the general provisions, rules of construction, and definitions
contained in the Delaware General Corporation Law shall govern the construction
of these Bylaws.
ARTICLE VI - INDEMNIFICATION
Section 1. DEFINITIONS. For the purpose of this Article, "agent"
includes any person who is or was a Director, officer, employee or other agent
of the Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the Corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" include any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" include attorneys' fees and any
expenses of establishing a right to indemnification under Section 4 or
Section 5(d).
Section 2. INDEMNIFICATION IN ACTIONS BY THIRD PARTIES. The Corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of the Corporation to procure a judgment in its favor) by reason of
the fact that such person is or was an agent of the Corporation, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interests of the Corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was
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unlawful. The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in
a manner which the person reasonably believed to be in the best interests of
the Corporation or that the person had reasonable cause to believe that the
person's conduct was unlawful.
Section 3. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that such person is or was an agent of the
Corporation, against expenses actually and reasonably incurred by such person in
connection with the defense or settlement of such action if such person acted in
good faith and in a manner such person believed to be in the best interests of
the Corporation and its stockholders. No indemnification shall be made under
this Section 3:
(a) In respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation in the
performance of such person's duty to the Corporation and its stockholders,
unless and only to the extent that the court in which such proceeding is or was
pending shall determine upon application that, in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
expenses and then only to the extent that the court shall determine;
(b) Of amounts paid in settling or otherwise disposing of a
pending action without court approval; or
(c) Of expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval.
Section 4. INDEMNIFICATION AGAINST EXPENSES. To the extent that an
agent of the Corporation has been successful, on the merits in defense of any
proceeding referred to in Sections 2 or 3 or in defense of any claim, issue or
matter therein, the agent shall be indemnified against expenses actually and
reasonably incurred by the agent in connection therewith.
Section 5. REQUIRED DETERMINATIONS. Except as provided in Section 4,
any indemnification under this Article shall be made by the Corporation only if
authorized in the specific case, upon a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 by any of the
following:
(a) A majority vote of a quorum consisting of Directors who
are not parties to such proceeding;
(b) If such a quorum of Directors is not obtainable, by
independent legal counsel in a written opinion;
(c) Approval of the stockholders, with the shares owned by the
person to be indemnified not being entitle to vote thereon; or
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(d) The court in which such proceeding is or was pending upon
application made by the Corporation or the agent or the attorney or other person
rendering services in connection with the defense, whether or not such
application by the agent, attorney or other person is opposed by the
Corporation.
Section 6. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by the Corporation prior to the final disposition of
such proceeding upon receipt of an undertaking by or on behalf of the agent to
repay such amount if it shall be determined ultimately that the agent is not
entitled to be indemnified as authorized in this Article.
Section 7. OTHER INDEMNIFICATION. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested Directors or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office, to the
extent such additional rights to indemnification are authorized in the
Certificate of Incorporation. The rights to indemnity hereunder shall continue
as to a person who has ceased to be a Director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of the
person. Nothing contained in this Article shall affect any right to
indemnification to which persons other than such Directors and officers may be
entitled by contract or otherwise.
Section 8. FORMS OF INDEMNIFICATION NOT PERMITTED. No indemnification
or advance shall be made under this Article, except as provided in Section 4 or
Section 5(d), in any circumstance where it appears:
(a) That it would be inconsistent with a provision of the
Certificate of Incorporation, Bylaws, a resolution of the stockholders or an
agreement in effect at the time of the accrual of the alleged cause of action
asserted in the proceeding in which the expenses were incurred or other amounts
were paid, which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 9. INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any agent of the Corporation against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such whether or not the Corporation would have the
power to indemnify the agent against such liability under the provisions of this
Article. In the event that any insurance maintained by the Corporation does not
provide full coverage, either by the requirement of a deductible or co-payment
or by the fact that the expenses actually and reasonably incurred exceed the
insurance limits or for any other reason, the Corporation shall have the power
to indemnify that agent or person for the amount not covered by the insurance;
PROVIDED, HOWEVER, that the Corporation shall have the power to indemnify the
agent or person against such liability notwithstanding any insurance and in
accordance with the provisions of this Article.
Section 10. NONAPPLICABILITY TO FIDUCIARIES OF EMPLOYEE BENEFIT PLANS.
This Article does not apply to any proceeding against any trustee, investment
manager or other fiduciary of an employee benefit plan in such person's capacity
as such, even though such
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person may also be an agent of the Corporation as defined in Section 1. The
Corporation shall have the power to indemnify such a trustee, investment
manager or other fiduciary to the fullest extent permitted by the Delaware
General Corporation Law.
ARTICLE VII - EMERGENCY BYLAWS
During any emergency resulting from an attack on the United States or
on a locality in which the Corporation conducts its business or customarily
holds meetings of the Board or its stockholders, or during any nuclear or atomic
disaster, or during the existence of any catastrophe or other similar emergency
condition as a result of which a quorum of the Board or of the executive
committee, if any, cannot readily be convened for action, a meeting of the Board
or of said committee may be called by any officer or Director. Such notice may
be given only to such of the Directors or members of the committee, as the case
may be, as it may be feasible to reach at the time and by such means as may be
feasible at the time including, without limitation, publication or radio.
The Director or Directors in attendance at the meeting of the Board,
and the member or members of the executive committee, if any, in attendance at
the meeting of the committee, shall constitute a quorum. If none are in
attendance at the meeting, the officers or other persons designated on a list
approved by the Board before the emergency, all in such order of priority and
subject to such conditions and for such period of time (not longer than
reasonably necessary after termination of the emergency) as may be provided in
the resolution approving the list, shall to the extent required to provide a
quorum at any meeting of the Board or of the executive committee, be deemed
Directors or members of the committee, as the case may be, for such meeting.
The Board, either before or during any such emergency, may provide, and
from time to time modify, lines of succession in the event that during such
emergency any or all officers or agents of the Corporation shall for any reason
be rendered incapable of discharging their duties. The Board, either before or
during any such emergency, may, effective in the emergency, change the principal
executive office or designate several alternative offices or authorize the
officers so to do.
ARTICLE VIII - AMENDMENTS
These Bylaws may be amended or repealed either by approval of the
outstanding shares or by the approval of the Board; PROVIDED, HOWEVER, that
after the issuance of shares, a Bylaw specifying or changing a fixed number of
Directors (except for a fixed number within a maximum or minimum range) or the
maximum or minimum number of a range, or changing from a fixed to a variable
Board or vice versa, may only be adopted by approval of the outstanding shares.
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SECRETARY'S CERTIFICATE OF ADOPTION OF BYLAWS
I hereby certify that I am the duly elected and acting Secretary of
WD-40 COMPANY, a Delaware corporation, and that the foregoing Bylaws constitute
the Bylaws of said Corporation as duly adopted on _____________ __, 1999.
IN WITNESS WHEREOF, I have signed my name and affixed the seal of said
Corporation this ____ day of ___________, 1999.
---------------------------------
Secretary
(CORPORATE SEAL)
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APPENDIX D
[INDEMNITEE'S NAME]
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT ("AGREEMENT"), effective as of ,
1999, is entered into by and between WD-40 Company, a Delaware corporation (the
"CORPORATION"), and [INDEMNITEE'S NAME] (the "INDEMNITEE").
W I T N E S S E T H:
WHEREAS, Indemnitee is a member of the board of directors of the
Corporation or a subsidiary of the Corporation (the "BOARD OF DIRECTORS") or is
an officer of the Corporation or a subsidiary of the Corporation, and in such
capacity is performing a valuable service for the Corporation; and
WHEREAS, competent persons have become reluctant to serve corporations
as directors, officers or in other capacities unless they are provided with
protection from the risk of personal claims and actions against them arising out
of their service to and activities on behalf of such corporations; and
WHEREAS, the Corporation has provided in the [AMENDED AND RESTATED]
Certificate of Incorporation of the Corporation (the "CERTIFICATE OF
INCORPORATION") that a director's liability to the Corporation's stockholders
for monetary damages shall be eliminated to the fullest extent permissible under
Delaware law (with certain limited exceptions), and further has provided in the
Certificate of Incorporation that the Corporation will indemnify its directors
and officers to the maximum extent permitted under applicable law; and
WHEREAS, Indemnitee is willing to serve, continue to serve, and take
on additional service for or on behalf of the Corporation on the condition that
he or she be indemnified as herein provided; and
WHEREAS, it is intended that Indemnitee shall be paid promptly by the
Corporation all amounts necessary to effectuate in full the indemnity provided
herein;
NOW, THEREFORE, in consideration of the premises and the covenants in
this Agreement, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve as a director
or officer of the Corporation or any subsidiary of the Corporation so long as
he or she is duly appointed or elected and qualified in accordance with the
applicable provisions of Certificate of Incorporation and Bylaws of the
Corporation or any subsidiary of the Corporation and until such time as he or
she resigns or fails to stand for election or is removed from his or her
position. Indemnitee may at any time and for any reason resign or be removed
from such position (subject to any other contractual obligation or other
obligation imposed by operation of law), without affecting the
indemnification agreed to hereunder, in which event the Corporation shall
have no obligation under this Agreement to continue Indemnitee in any such
position.
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2. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE
CORPORATION.
(a) The Corporation shall indemnify Indemnitee against Expenses and
Liabilities incurred in connection with any Proceeding arising out of acts or
omissions of Indemnitee occurring during Indemnitee's service as a director or
as an officer of the Corporation or any subsidiary of the Corporation, other
than a Proceeding by or in the right of the Corporation against Indemnitee, to
the fullest extent permitted by applicable law or the Certificate of
Incorporation (as such law or the Certificate of Incorporation may be amended
from time to time, but only to the extent that any such amendment permits the
Corporation to provide broader indemnification rights than such law or the
Certificate of Incorporation permitted the Corporation to provide before such
amendment), so long as Indemnitee has acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation and, with respect to any criminal Proceeding, Indemnitee had no
reasonable cause to believe that Indemnitee's conduct was unlawful.
(b) Indemnitee shall be paid promptly by the Corporation all amounts
necessary to effectuate the foregoing indemnity.
3. INDEMNIFICATION FOR PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION.
(a) The Corporation shall indemnify Indemnitee against Expenses and
Liabilities incurred in connection with any Proceeding by or in the right of the
Corporation against Indemnitee and arising out of acts or omissions of
Indemnitee occurring during Indemnitee's service as a director or as an officer
of the Corporation or any subsidiary of the Corporation to the fullest extent
permitted by applicable law or the Certificate of Incorporation (as such law or
the Certificate of Incorporation may be amended from time to time, but only to
the extent that any such amendment permits the Corporation to provide broader
indemnification rights than such law or the Certificate of Incorporation
permitted the Corporation to provide before such amendment), so long as
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in or not opposed to the best interests of the Corporation AND except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Corporation unless
and only to the extent that the Delaware Court of Chancery or the court in which
such Proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification for Expenses and
Liabilities incurred in connection with any such claim, issue or matter (as the
Delaware Court of Chancery or such other court shall deem proper).
(b) Indemnitee shall be paid promptly by the Corporation all amounts
necessary to effectuate the foregoing indemnity.
4. INDEMNIFICATION UNDER CERTIFICATE OF INCORPORATION. The right to
indemnification provided for in the Certificate of Incorporation (as the
Certificate of Incorporation may be amended from time to time, but only to the
extent that any such amendment permits the Corporation to provide broader
indemnification rights than the Certificate of Incorporation permitted the
Corporation to provide before such amendment) shall be presumed to have been
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<PAGE>
relied upon by Indemnitee in serving or continuing to serve the Corporation and
shall be enforceable as a contract right.
5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is a party to and is successful, on the merits or
otherwise, in any Proceeding arising out of acts or omissions of Indemnitee
occurring during Indemnitee's service as a director or officer of the
Corporation or any subsidiary of the Corporation, he or she shall be
indemnified against Expenses and Liabilities actually and reasonably incurred
by him or her or on his or her behalf in connection therewith. If Indemnitee
is not wholly successful in such Proceeding but is successful, on the merits
or otherwise, as to one or more but less than all claims, issues or matters
in such Proceeding, the Corporation shall indemnify Indemnitee against all
Expenses and Liabilities actually and reasonably incurred by him or her or on
his or her behalf in connection with each successfully resolved claim, issue
or matter. For the purposes of this Section and without limiting the
foregoing, the termination of any claim, issue or matter in any such
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
6. ADVANCEMENT OF EXPENSES. All reasonable Expenses incurred by or on
behalf of Indemnitee shall be advanced from time to time by the Corporation
to Indemnitee within thirty (30) days after the Corporation's receipt of a
written request for an advance of Expenses, whether prior to or after final
disposition of a Proceeding (except to the extent that there has been a Final
Adverse Determination that Indemnitee is not entitled to be indemnified for
such Expenses). The written request for an advancement of any and all
Expenses under this paragraph shall contain reasonable detail of the Expenses
incurred by Indemnitee. Indemnitee hereby agrees to repay the amounts
advanced if it is ultimately determined that Indemnitee is not entitled to be
indemnified pursuant to the terms of this Agreement.
7. LIMITATIONS. The foregoing indemnity and advancement of Expenses
shall apply only to the extent that Indemnitee has not been indemnified and
reimbursed pursuant to such insurance as the Corporation may maintain for
Indemnitee's benefit, or otherwise; PROVIDED, HOWEVER, that notwithstanding
the availability of such other indemnification and reimbursement, Indemnitee
may claim indemnification and advancement of Expenses pursuant to this
Agreement by assigning to the Corporation, at its request, Indemnitee's
claims under such insurance to the extent Indemnitee has been paid by the
Corporation.
8. INSURANCE AND FUNDING. The Corporation may purchase and maintain
insurance to protect itself and/or Indemnitee against any Expenses and
Liabilities in connection with any Proceeding to the fullest extent permitted
by applicable laws. The Corporation may create a trust fund, grant an
interest or use other means (including, without limitation, a letter of
credit) to ensure the payment of such amounts as may be necessary to effect
indemnification or advancement of Expenses as provided in this Agreement.
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9. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) Whenever Indemnitee believes that he or she is entitled to
indemnification pursuant to this Agreement, Indemnitee shall submit a written
request for indemnification to the Corporation. Any request for indemnification
shall include sufficient documentation or information reasonably available to
Indemnitee to support his or her claim for indemnification. Indemnitee shall
submit such claim for indemnification within a reasonable time not to exceed
five years after any judgment, order, settlement, dismissal, arbitration award,
conviction, acceptance of a plea of nolo contendere or its equivalent, final
termination or other disposition or partial disposition of any Proceeding,
whichever is the later date for which Indemnitee requests indemnification. The
President or the Secretary or other appropriate officer shall, promptly upon
receipt of Indemnitee's request for indemnification, advise the Board of
Directors in writing that Indemnitee has made such request. Determination of
Indemnitee's entitlement to indemnification shall be made not later than ninety
(90) days after the Corporation's receipt of his or her written request for such
indemnification.
(b) The Indemnitee shall be entitled to select the forum in which
Indemnitee's request for indemnification will be heard, which selection shall be
included in the written request for indemnification required in Section 9(a).
The forum shall be any one of the following:
(i) The stockholders of the Corporation;
(ii) A quorum of the Board of Directors consisting of
Disinterested Directors; or
(iii) Independent Legal Counsel, who shall make the determination
in a written opinion.
If Indemnitee fails to make such designation, his or her claim shall be
determined by an appropriate court of the State of Delaware.
(c) Indemnitee shall cooperate with the person, persons or entity
making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonable necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Corporation (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the
Corporation hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
10. PRESUMPTION AND EFFECTS OF CERTAIN PROCEEDINGS.
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 9(a) of this Agreement, and the
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Corporation shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any
determination contrary to that presumption.
(b) If the person, persons or entity empowered or selected under
Section 9(b) of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within ninety (90) days
after receipt by the Corporation of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) prohibition of such
indemnification under applicable law; PROVIDED, HOWEVER, that such ninety (90)
day period may be extended for a reasonable time, not to exceed an additional
ninety (90) days, if the person, persons or entity making the determination with
respect to entitlement to indemnification in good faith require(s) such
additional time for the obtaining or evaluating of documentation and/or
information relating thereto.
11. FEES AND EXPENSES OF INDEPENDENT LEGAL COUNSEL. The Corporation
agrees to pay the reasonable fees and expenses of Independent Legal Counsel
should such Counsel be retained to make a determination of Indemnitee's
entitlement to indemnification pursuant to Section 9 of this Agreement, and
to fully indemnify such Counsel against any and all expenses and losses
incurred by any of them arising out of or relating to this Agreement or their
engagement pursuant hereto.
12. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination pursuant to Section 9 hereof
is made that Indemnitee is not entitled to indemnification, (ii) advances of
Expenses are not made pursuant to this Agreement, (iii) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to this Agreement, or (iv) Indemnitee otherwise seeks enforcement of this
Agreement, Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware of his or her rights. The Corporation
shall not oppose Indemnitee's right to seek any such adjudication.
(b) In the event that a determination that Indemnitee is not entitled
to indemnification, in whole or in part, has been made pursuant to Section 9
hereof, the decision in the judicial proceeding provided in paragraph (a) of
this Section 12 shall be made de novo and Indemnitee shall not be prejudiced by
reason of a determination that he or she is not entitled to indemnification.
(c) If a determination that Indemnitee is entitled to indemnification
has been made pursuant to Section 9 or 10 hereof or otherwise pursuant to the
terms of this Agreement, the Corporation shall be bound by such determination in
the absence of (i) a misrepresentation of a material fact by Indemnitee or (ii)
a specific finding (which has become final) by an appropriate court of the State
of Delaware that all or any part of such indemnification is expressly prohibited
by law.
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(d) In any court proceeding pursuant to this Section 12, the
Corporation shall be precluded from asserting that the procedures and
presumptions of this Agreement are not valid, binding and enforceable. The
Corporation shall stipulate in any such court that the Corporation is bound by
all the provisions of this Agreement and is precluded from making any assertion
to the contrary.
(e) Expenses reasonably incurred by Indemnitee in connection with his
or her request for indemnification under this Agreement, seeking enforcement of
this Agreement or to recover damages for breach of this Agreement shall be borne
by the Corporation.
13. MODIFICATION, WAIVER, TERMINATION AND CANCELLATION. No supplement,
modification, termination, cancellation or amendment of this Agreement shall
be binding unless executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar),
nor shall such waiver constitute a continuing waiver.
14. NOTICE BY INDEMNITEE AND DEFENSE OF CLAIM. Indemnitee shall
promptly notify the Corporation in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information or other
document relating to any matter, whether civil, criminal, administrative or
investigative, but the omission so to notify the Corporation will not relieve
it from any liability which it may have to Indemnitee if such omission does
not prejudice the Corporation's rights. If such omission does prejudice the
Corporation's rights, the Corporation will be relieved from liability only to
the extent of such prejudice; nor will such omission relieve the Corporation
from any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any Proceeding as to which Indemnitee notifies the
Corporation of the commencement thereof:
(a) The Corporation will be entitled to participate therein at its own
expense; and
(b) The Corporation jointly with any other indemnifying party
similarly notified will be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee; PROVIDED, HOWEVER, that the Corporation
shall not be entitled to assume the defense of any Proceeding if Indemnitee
shall have reasonably concluded that there may be a conflict of interest between
the Corporation and Indemnitee with respect to such Proceeding. After notice
from the Corporation to Indemnitee of its election to assume the defense
thereof, the Corporation will not be liable to Indemnitee under this Agreement
for any Expenses subsequently incurred by Indemnitee in connection with the
defense thereof, other than reasonable costs of investigation or as otherwise
provided below. Indemnitee shall have the right to employ his or her own counsel
in such Proceeding but the fees and expenses of such counsel incurred after
notice from the Corporation of its assumption of the defense thereof shall be at
the expense of Indemnitee unless:
(i) The employment of counsel by Indemnitee has been authorized
by the Corporation;
(ii) Indemnitee shall have reasonably concluded that counsel
engaged by the Corporation may not adequately represent Indemnitee; or
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(iii) The Corporation shall not in fact have employed counsel
to assume the defense in such Proceeding or shall not in fact have
assumed such defense and be acting in connection therewith with
reasonable diligence;
in each of which cases the fees and expenses of such counsel shall be at the
expense of the Corporation.
(c) The Corporation shall not settle any Proceeding in any manner
which would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent; provided, however, that Indemnitee will not unreasonably
withhold his or her consent to any proposed settlement.
15. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to:
[INDEMNITEE'S NAME]
------------------------------
------------------------------
(b) If to the Corporation, to:
WD-40 Company
Attention: President
or to such other address as may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.
16. NONEXCLUSIVITY. The rights of Indemnitee hereunder shall not be
deemed exclusive of any other rights to which Indemnitee may now or in the
future be entitled under the Delaware General Corporation Law, the
Certificate of Incorporation or the Bylaws of the Corporation, or any
agreements, vote of stockholders, resolution of the Board of Directors or
otherwise.
17. CERTAIN DEFINITIONS.
(a) "DISINTERESTED DIRECTOR" shall mean a director of the Corporation
who is not or was not a party to the Proceeding in respect of which
indemnification is being sought by Indemnitee.
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<PAGE>
(b) "EXPENSES" shall include all direct and indirect costs (including,
without limitation, attorneys' fees, retainers, court costs, transcripts, fees
of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, all other
disbursements or out-of-pocket expenses and reasonable compensation for time
spent by Indemnitee for which he or she is otherwise not compensated by the
Corporation) actually and reasonably incurred in connection with a Proceeding or
establishing or enforcing a right to indemnification under this Agreement,
applicable law or otherwise; PROVIDED, HOWEVER, that "EXPENSES" shall not
include any Liabilities.
(c) "FINAL ADVERSE DETERMINATION" shall mean that a determination that
Indemnitee is not entitled to indemnification shall have been made pursuant to
Section 9 hereof and either (1) a final adjudication in a Delaware court
pursuant to Section 12(a) hereof shall have denied Indemnitee's right to
indemnification hereunder, or (2) Indemnitee shall have failed to file a
complaint in a Delaware court pursuant to Section 12(a) for a period of one
hundred twenty (120) days after the determination made pursuant to Section 9
hereof.
(d) "INDEMNIFICATION PERIOD" shall mean the period of time during
which Indemnitee shall continue to serve as a director or as an officer of the
Corporation or any subsidiary of the Corporation, and thereafter so long as
Indemnitee shall be subject to any possible Proceeding arising out of acts or
omissions of Indemnitee as a director or as an officer of the Corporation or any
subsidiary of the Corporation.
(e) "INDEPENDENT LEGAL COUNSEL" shall mean a law firm or a member of a
law firm selected by the Corporation and approved by Indemnitee (which approval
shall not be unreasonably withheld) and that neither is presently nor in the
past five years has been retained to represent: (i) the Corporation or any
subsidiary of the Corporation, in any material matter, or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Legal Counsel" shall not
include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the
Corporation or Indemnitee in an action to determine Indemnitee's right to
indemnification under this Agreement.
(f) "LIABILITIES" shall mean liabilities of any type whatsoever
including, but not limited to, any judgments, fines, ERISA excise taxes and
penalties, penalties and amounts paid in settlement (including all interest
assessments and other charges paid or payable in connection with or in respect
of such judgments, fines, penalties or amounts paid in settlement) of any
Proceeding.
(g) "PROCEEDING" shall mean any threatened, pending or completed
action, claim, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding whether civil,
criminal, administrative or investigative, including any appeal therefrom.
18. BINDING EFFECT, DURATION AND SCOPE OF AGREEMENT. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and assigns (including any
direct or indirect successor by purchase, merger, consolidation or otherwise
to all or substantially all of the business or assets of the
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Corporation), spouses, heirs and personal and legal representatives. This
Agreement shall continue in effect during the Indemnification Period,
regardless of whether Indemnitee continues to serve as a director or as an
officer of the Corporation or any subsidiary of the Corporation.
19. SEVERABILITY. If any provision or provisions of this Agreement (or
any portion thereof) shall be held to be invalid, illegal or unenforceable
for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby; and
(b) to the fullest extent legally possible, the provisions of this
Agreement shall be construed so as to give effect to the intent of any provision
held invalid, illegal or unenforceable.
20. GOVERNING LAW AND INTERPRETATION OF AGREEMENT. This Agreement
shall be governed by and construed and enforced in accordance with the laws
of the State of Delaware, as applied to contracts between Delaware residents
entered into and to be performed entirely within Delaware. If the laws of the
State of Delaware are hereafter amended to permit the Corporation to provide
broader indemnification rights than said laws permitted the Corporation to
provide prior to such amendment, the rights of indemnification and
advancement of expenses conferred by this Agreement shall automatically be
broadened to the fullest extent permitted by the laws of the State of
Delaware, as so amended.
21. CONSENT TO JURISDICTION. The Corporation and Indemnitee each
irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action
instituted under this Agreement shall be brought only in the state courts of
the State of Delaware.
22. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties hereto, and there are no other agreements, contracts or
understandings between the parties hereto with respect to the subject matter
of this Agreement, except as specifically referred to herein or as provided
in Section 16 hereof.
23. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, this Agreement is executed and delivered as of the date
first set forth above.
WD-40 COMPANY
By:
Title:
------------------------------------
INDEMNITEE
[INDEMNITEE'S NAME]
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PROXY WD-40 COMPANY PROXY
1061 Cudahy Place
San Diego, CA 92110
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking previous proxies for such stock, hereby appoints John
S. Barry and Harlan F. Harmsen, and each of them, proxies of the undersigned,
with power of substitution to each, to vote all stock of WD-40 Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at the Mission Valley Doubletree Hotel, Grand Ballroom, 901
Camino del Rio South, San Diego, California 92108, on Tuesday, December 14, 1999
at 2:00 p.m. and at any adjournments thereof.
Please mark, sign, date and return the
proxy card promptly using the enclosed
envelope
<PAGE>
WD-40 COMPANY
PLEASE MARK OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING ITEMS:
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: FOR ALL WITHHOLD FOR ALL
J.S. Barry, M.L. Crivello, D.W. Derbes, nominees AUHORITY nominees
H.F. Harmsen, J.L. Heckel, G.O. Ridge, to vote for EXCEPT
M.L. Roulette, G.C. Schleif, C.F. Sehnert, ALL nominees those marked to
E.J. Walsh (INSTRUCTIONS: To withhold the contrary
authority to vote for any nominee(s), write that
nominee's name on the space provided below.) / / / / / /
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To change the state of incorporation of
the Company from California to Delaware. / / / / / /
3. To increase the number of authorized shares FOR AGAINST ABSTAIN
of common stock of the Company from
18,000,000 to 36,000,000. / / / / / /
4. To ratify the selection of Pricewaterhouse- FOR AGAINST ABSTAIN
Coopers LLP as the Company's independent
accountants for fiscal year 2000. / / / / / /
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED:_____________, 1999
Signature:_______________________________________
Signature (if held jointly):_____________________
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3 AND 4.
